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Competition, imitation and growth with step-by-step innovation (2001)
| Venue: | Review of Economic Studies |
| Citations: | 131 - 2 self |
BibTeX
@ARTICLE{Harris01competition,imitation,
author = {Christopher Harris and Peter Howitt and John Vickers},
title = {Competition, imitation and growth with step-by-step innovation},
journal = {Review of Economic Studies},
year = {2001}
}
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Abstract
Is more intense product market competition and imitation good or bad for growth?Thisquestionisaddressedinthecontextofanendogenousgrowth model with “step-by-step ” innovations, in which technological laggards must first catch up with the leading-edge technology before battling for technological 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 incentive 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.
Keyphrases
step-by-step innovation intense product market competition technological laggard outsider firm schumpeterian model complementary role leading-edge technology usual schumpeterian effect little imitation much imitation technological leadership patent policy frequent neck-and-neck competition positive effect
