Competition and Growth in an Endogenous Growth Model with Expanding Product Variety without Scale Effects

Dominique Bianco ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to analyse the relationship between competition and growth in an endogenous growth model with expanding product variety without scale effect. In order to do this, we develop an extension of the Bucci (2005) model in which we eliminate the scale effects. We find that the relationship between competition and growth is always inverted U shaped. We explain this result by the composition of two effects on growth : resource allocation and profit incentive effects. For low values of product market competition, an increase of competition has an positive effect on growth. For large values of competition, we have a negative relationship between competition and growth.

Keywords: Endogenous Growth; Horizontal Differentiation; Technological Change; Imperfect Competition (search for similar items in EconPapers)
JEL-codes: O41 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse and nep-dge
Date: 2007-11-10, Revised 2007-12-08
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Published in Brussels Economic Review/Cahiers Economiques de Bruxelles Autumn.49 (3)(2006): pp. 191-202

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http://mpra.ub.uni-muenchen.de/6179/ orginal version
http://mpra.ub.uni-muenchen.de/9469/ revised version

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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:6179

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