Competition and growth with step-by-step innovation: An example

This paper develops a simple example to analyse the relationship between product market competition and growth in a model with step-by-step innovations, where laggards can never leapfrog the current industry leaders, but instead must first catch up with the leaders before battling for technological leadership in the future. Unlike in existing Schumpeterian models of growth, more intense product market competition and/or imitations may be growth-enhancing. (C) 1997 Elsevier Science B.V.