Leadership Contestability, Monopolistic Rents and Growth

22 Pages Posted: 28 Mar 2011

See all articles by Roberto Piazza

Roberto Piazza

International Monetary Fund (IMF)

Date Written: March 2011

Abstract

I construct an endogenous growth model where R&D is carried out at the industry level in a game of innovation between leaders and followers. Innovation costs for followers are assumed to increase with the technological lag from leaders. We obtain three results that contrast with standard Schumpeterian models, such as Aghion and Howitt (1992). First, leaders may innovate in equilibrium, in an attempt to force followers out of the innovation game. Second, policies (such as patents) that allow for strong protections of monopolies can reduce the steady state growth rate of the economy. Third, multiple equilibria arise when monopolies' protection is large.

Keywords: Consumer goods, Consumption, Economic growth, Economic models, Industrial production

Suggested Citation

Piazza, Roberto, Leadership Contestability, Monopolistic Rents and Growth (March 2011). IMF Working Paper No. 11/63, Available at SSRN: https://ssrn.com/abstract=1795842

Roberto Piazza (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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