Market Structure and Performance: An Anti-Trust Story of Endogenous Growth

• Main Author: LEUNG, Hing-Man
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2003
• Subjects: Growth; Market Structure; Schumpeterian hypothesis; R&D; Externalities; Finance; Growth and Development
• Online Access: https://ink.library.smu.edu.sg/soe_research/683; https://ink.library.smu.edu.sg/context/soe_research/article/1682/viewcontent/Marketstructureandgrowth.pdf
• Institution: Singapore Management University

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.