Competition, Imitation and Growth with Non-Diversifiable Risk

Tapio Palokangas

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: This paper analyzes the growth and welfare effects of competition in an endogenously-growing economy with imitation and non-diversifiable risk. The main findings are as follows. There is no imitation without positive profits during innovation races. A larger proportion of competing industries leads to slower economic growth. When competitive profits are high or low, the economy grows faster than when they are of medium size. If the government subsidizes innovation and imitation optimally, then competitive profits are positively associated with welfare. With an optimal uniform subsidy to all R&D, there is an “inverted-U” relationship between competitive profits and welfare.

Keywords: Imitation; competition; Schumpeterian growth (search for similar items in EconPapers)
JEL-codes: L11 L16 O31 O34 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-06
New Economics Papers: this item is included in nep-com and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c011_036

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