Product Market Competition and Economic Growth: The Role of Increasing Returns to Production Specialization

摘要

In a simple one-sector endogenous growth model of imperfect competition, we show that the competitiveness-growth relationship can be mixed, crucially depending on the degree of the increasing returns to specialization. This ambiguity not only reconciles the theoretical prediction with the recent empirical evidence, but also provides a plausible explanation for the diversity in the competitiveness-growth relationship across countries.