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We examine the economic analysis of the relationship between innovation and product market competition. First, we give a brief tour of the intellectual history of the area. Second, we examine how the Aghion-Howitt framework has influenced the development of the literature theoretically and (especially) empirically, with an emphasis on the “inverted U”: the idea that innovation rises and then eventually falls as the intensity of competition increases. Thirdly, we look at recent applications and development of the framework in the areas of competition policy, international trade and structural Industrial Organization.
Authors
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
John Van Reenen
Working Paper details
- DOI
- 10.1920/wp.ifs.2021.4321
- Publisher
- Institute for Fiscal Studies
Suggested citation
Griffith, R and Van Reenen, J. (2021). Product market competition, creative destruction and innovation. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/product-market-competition-creative-destruction-and-innovation (accessed: 28 March 2024).
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