Product variety, competition and economic growth

Pier Paolo Saviotti and Andreas Pyka

A chapter in Schumpeterian Perspectives on Innovation, Competition and Growth, 2009, pp 71-95 from Springer

Abstract: Abstract In this paper, we study the relationship between competition and economic growth using a model of economic development through the creation of new sectors. In our model, competition has both an intra- and an inter-sector component. We find that the best conditions for economic development are achieved when a suitable ratio of inter- to intra-sector competition is achieved. This ratio constitutes a compromise between providing a temporary monopoly to the first entrepreneur (low inter-sector competition) and creating enough imitation to expand the sector (intra-sector competition).

Keywords: Competition; Growth; Innovation; R&D (search for similar items in EconPapers)
JEL-codes: O O3 O30 (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-540-93777-7_6

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