Competition, Financial Discipline and Growth

Philippe Aghion, Mathias Dewatripont and Patrick Rey

Scholarly Articles from Harvard University Department of Economics

Abstract: This paper develops a general equilibrium model of technological adoption in an economy populated by 'satisficing' entrepreneurs whose main objective is to minimise innovative effort while keeping the firm alive. In such an economy, product market competition is shown to have a stimulating effect on growth. Indeed, by reducing the amount of slack a manager can afford while keeping his firm alive, competition, combined with the threat of liquidation acts as a disciplinary device which fosters technology adoption and therefore growth. We then investigate how the existence of financial markets affects the importance of this growth-enhancing effect of competition.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (131)

Published in Rev Econ Studies

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/1249041 ... ,%20and%20Growth.pdf (application/pdf)

Related works:
Journal Article: Competition, Financial Discipline and Growth (1999)
Working Paper: Competition, Financial Discipline and Growth (1999)
Working Paper: Competition, financial discipline and growth (1999)
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:12490416

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 ().