Competition and Growth: Reconciling Theory and Evidence

“A useful book full of careful measurement of the incentives, institutions, and causal flows in the knowledge economy. Shows both the importance of the knowledge economy (now denied by fools on Wall Street) and how sound economic analysis applies to it (recently denied by the same fools.)”–Timothy Bresnahan, Landau Professor of Technology in the Economy and Chair, Department of Economics, Stanford University “Aghion and Griffith explain the heretofore confused relationships between competition and innovation with exemplary analytic clarity. Their empirical evidence on competition and economic growth shows the value of blending carefully argued theory with thoughtfully assembled statistics.”–Timothy Bresnahan, Landau Professor of Technology in the Economy and Chair, Department of Economics, Stanford University “Whereas the president of France and the chancellor of Germany believe that national or European ‘champions,’ assisted by the state and unfettered by competition policy, are best for providing innovations at the frontiers of science and technology and for economic growth, the reader of this book will learn that the facts are different. At the technological frontier, innovations are driven by competition and by the desire to escape competitive pressures. With imaginative theoretical modelling and sophisticated empirical analysis, Aghion and Griffith solve outstanding puzzles and show that the effects of competition on innovations and growth depend on proximity to the technological frontier. This work provides the standard for future research.”–Martin Hellwig, Max Planck Institute for Research on Collective Goods, Bonn

Philippe Aghion is a Professor at the College de France and at the London School of Economics. Aghion is coauthor (with Peter Howitt) of Endogenous Growth Theory (MIT Press). Rachel Griffith is Deputy Director at the Institute for Fiscal Studies (IFS) and a Reader in Industrial Organization at University College London.

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