Competition, Imitation and Growth with Step-by-Step Innovation

Christopher Harris, Peter Howitt, John Vickers and Philippe Aghion

Scholarly Articles from Harvard University Department of Economics

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 techno- logical 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 in- centive 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.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (551)

Published in Review of Economic Studies

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/1237501 ... tep%20Innovation.pdf (application/pdf)

Related works:
Journal Article: Competition, Imitation and Growth with Step-by-Step Innovation (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:12375013

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().