Replication data for: Competition as a Discovery Procedure: Schumpeter Meets Hayek in a Model of Innovation
Principal Investigator(s): View help for Principal Investigator(s) Pedro Bento
Version: View help for Version V1
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Project Description
Summary:
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I incorporate an insight of Friedrich Hayek—that competition allows a thousand flowers to bloom, and discovers the best among them—into a model of Schumpeterian innovation. Firms face uncertainty about the optimal direction of innovation, so more innovations implies a higher expected value of the "best" innovation. The model accounts for two seemingly contradictory relationships reported in recent empirical studies—a positive relationship between competition and industry-level productivity growth, and an inverted-U relationship between competition and firm-level innovation. Notwithstanding the positive relationship between competition and growth, I find antitrust policy reduces industry-level growth.
Scope of Project
JEL Classification:
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B52 Current Heterodox Approaches: Historical; Institutional; Evolutionary; Modern Monetary Theory
D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
K21 Antitrust Law
L11 Production, Pricing, and Market Structure; Size Distribution of Firms
L12 Monopoly; Monopolization Strategies
O31 Innovation and Invention: Processes and Incentives
B52 Current Heterodox Approaches: Historical; Institutional; Evolutionary; Modern Monetary Theory
D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
K21 Antitrust Law
L11 Production, Pricing, and Market Structure; Size Distribution of Firms
L12 Monopoly; Monopolization Strategies
O31 Innovation and Invention: Processes and Incentives
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