Competition, Imitation and Growth with Step-by-Step Innovation
TLDR
In contrast to earlier Schumpeterian models in which innovations are always made by outsider firms who earn no rents if they fail to innovate and become monopolies if they do innovate, the authors find that the usual Schumpetersian effect of more intense product market competition is almost always outweighed by the increased incentive for firms to innovate in order to escape competition, so that PMC has a positive effect on growth.Abstract:
Is more intense product market competition and imitation good or bad for growth? This question is addressed in the context of an endogenous growth model with "step-by-step" innovations, in which technological laggards must first catch up with the leading-edge technology before battling for technological leadership in the future. In contrast to earlier Schumpeterian models in which innovations are always made by outsider firms who earn no rents if they fail to innovate and become monopolies if they do innovate, here we find: first, that the usual Schumpeterian effect of more intense product market competition (PMC) is almost always outweighed by the increased incentive for firms to innovate in order to escape competition, so that PMC has a positive effect on growth; second, that a little imitation is almost always growth-enhancing, as it promotes more frequent neck-and-neck competition, but too much imitation is unambiguously growth-reducing. The model thus points to complementary roles for competition (anti-trust) policy and patent policy.read more
Citations
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Competition and Innovation: an Inverted-U Relationship
TL;DR: In this article, the authors investigate the relationship between product market competition and innovation and find strong evidence of an inverted-U relationship using panel data, where competition discourages laggard firms from innovating but encourages neck-and-neck firms to innovate.
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Chapter 6 Institutions as a Fundamental Cause of Long-Run Growth
TL;DR: In this paper, the authors develop the empirical and theoretical case that differences in economic institutions are the fundamental cause of economic development and develop a framework for thinking about why economic institutions differ across countries.
Journal ArticleDOI
Competition and Innovation: An Inverted U Relationship
Philippe Aghion,Philippe Aghion,Philippe Aghion,Nicholas Bloom,Nicholas Bloom,Richard Blundell,Rachel Griffith,Rachel Griffith,Peter Howitt,Peter Howitt +9 more
TL;DR: In this paper, the authors investigated the relationship between product market competition and innovation and found a robust inverted-U relationship between competition and patenting, and developed an endogenousm growth model with step-by-step innovation that can deliver this inverted U pattern.
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The Economics of Growth
Philippe Aghion,Peter Howitt +1 more
TL;DR: The economics of growth as mentioned in this paper is a comprehensive, rigorous, and up-to-date introduction to growth economics that presents all the major growth paradigms and shows how they can be used to analyze the growth process and growth policy design.
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Regulation, Productivity and Growth: OECD Evidence
TL;DR: Nicoletti and Scarpetta as discussed by the authors investigate empirically the regulation-growth link using data that cover a large set of manufacturing and service industries in OECD countries over the past two decades and focusing on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance.
References
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A Model of Growth Through Creative Destruction
Philippe Aghion,Peter Howitt +1 more
TL;DR: In this paper, a model of endogenous growth is developed in which vertical innovations, generated by a competitive research sector, constitute the underlying source of growth and equilibrium is determined by a forward-looking difference equation, according to which the amount of research in any period depends upon the expected amount of the research next period.
Journal ArticleDOI
Competition and corporate performance
TL;DR: In this paper, the authors present evidence that competition, as measured by increased numbers of competitors or by lower levels of rents, is associated with a significantly higher rate of total factor productivity growth.
Book
Endogenous growth theory
Philippe Aghion,Peter Howitt +1 more
TL;DR: Aghion and Howitt make use of Schumpeter's concept of creative destruction, the competitive process whereby entrepreneurs constantly seek new ideas that will render their rivals' ideas obsolete as mentioned in this paper.
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Innovation, Imitation and intellectual Property Rights
TL;DR: In this article, the authors examined the debate between the North and the South about the enforcement of intellectual property rights in the South within a dynamic general equilibrium framework in which the North innovates new products and the south imitates them.
Report SeriesDOI
Dynamic count data models of technological innovation
TL;DR: In this paper, the authors examined the application of count data models to firm level panel data on technological innovations and developed a fixed effects estimator that generalises the standard Poisson and negative binomial models allowing for dynamic feedback through both the firm's stock of knowledge and its product market power.