A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth

Wendy Carlin (), Mark Schaffer () and Paul Seabright

No 402, CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University

Abstract: This paper examines the importance of competition in the growth and development of firms. We make use of the large-scale natural experiment of the shift from an economic system without competition to a market economy to shed light on the factors that influence innovation by firms and their subsequent growth. Using a dataset from a survey of nearly 4,000 firms in 24 transition countries, we find evidence of the importance of a minimum of rivalry in both innovation and growth: the presence of at least a few competitors is effective both directly and through improving the efficiency with which the rents from market power in product markets are utilised to undertake innovation.

Keywords: competition; productivity growth; innovation; rivalry; transition (search for similar items in EconPapers)
JEL-codes: L1 L33 O12 P0 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-com, nep-dev, nep-lam and nep-tra
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Citations: View citations in EconPapers (80)

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Related works:
Journal Article: A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth (2004)
Working Paper: A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth (2004)
Working Paper: A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth (2004)
Working Paper: A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth (2004)
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