Since Schumpeter, a major concern has been: what monopoly does to growth? Monopoly’s static, allocative inefficiency is well established. How much this is offset by its dynamic progressiveness is unclear. First, using the empirical literature, we argue that the presumed progressiveness of monopoly must be rejected. Second, we extend the endogenous growth model to obtain a full Pareto ranking of competition, monopoly, Cournot and Bertrand. Competition beats Cournot, which in turn beats monopoly. Growth rate is invariant with structures, which accords well with empirical evidence. Bertrand happens to share the ranking with competition. The findings have a strong anti-trust overtone.
Market Structure; Schumpeterian hypothesis; R&D; Externalities
Finance | Growth and Development
Market Structure and Performance: An Anti-Trust Story of Endogenous Growth. (2003). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/683
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