Competition and performance: The different roles of capital and labor

Thijs ten Raa and Pierre Mohnen

Journal of Economic Behavior & Organization, 2008, vol. 65, issue 3-4, 573-584

Abstract: Neoclassical economists argue that competition promotes efficiency, but Schumpeter argues that it is monopoly rents that help entrepreneurs to invest in R&D. We investigate the overall effect of competition on total factor productivity growth (TFP) growth. We use rent, defined as the factor reward above its perfectly competitive value, as a negative measure of competition. Our main finding is that performance is positively associated with rents on capital but not with rents on labor. Neoclassical economists and Schumpeter may both be right, but the mechanisms differ.

Date: 2008
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Related works:
Chapter: Competition and Performance: The Different Roles of Capital and Labor (2009)
Working Paper: Competition and Performance: The Different Roles of Capital and Labor (2003)
Working Paper: Competition and Performance: The Different Roles of Capital and Labor (2003)
Working Paper: Competition and Performance: The Different Roles of Capital and Labor (2003)
Working Paper: Competition and Performance: The Different Roles of Capital and Labor (2003)
Working Paper: Competition and Performance: The Different Roles of Capital and Labor (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:65:y:2008:i:3-4:p:573-584

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