Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73368
Authors: 
Bauer, Christian
Year of Publication: 
2006
Series/Report no.: 
BGPE Discussion Paper 1
Abstract: 
This paper introduces competitive markets in the Grossman- Helpman [1991, ch. 3] increasing variety growth model. In this standard model of endogenous growth theory, competition has a negative incentive effect. Accordingly, a larger resource base is required to sustain long run growth. In an intermediate range, however, there is path dependence. In this case, too much initial competition may ultimately stall the growth process. Moreover, by introducing asymmetry in market-power, competition gives rise to static welfare losses. In economies with a small positive growth rate, welfare losses due to varying mark-up factors may be large enough to offset the benefits of growth.
JEL: 
O34
O41
Document Type: 
Working Paper

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