Product Market Competition, Creative Destruction and Innovation

34 Pages Posted: 4 Feb 2022

See all articles by Rachel Griffith

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

John Van Reenen

Massachusetts Institute of Technology (MIT)

Date Written: November 1, 2021

Abstract

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.

Keywords: Competition, creative destruction, Innovation

JEL Classification: B20, L13, L40, O31, O32

Suggested Citation

Griffith, Rachel and Van Reenen, John, Product Market Competition, Creative Destruction and Innovation (November 1, 2021). CEPR Discussion Paper No. DP16763, Available at SSRN: https://ssrn.com/abstract=4026627

Rachel Griffith (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://www.ifs.org.uk/people/profile?id=37

Centre for Economic Policy Research (CEPR)

London
United Kingdom

John Van Reenen

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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