NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Competition, Innovation and Growth with Limited Commitment

Ramon Marimon, Vincenzo Quadrini

NBER Working Paper No. 12474
Issued in August 2006
NBER Program(s):   EFG

We study how barriers to competition---such as restrictions to business start-up and strict enforcement of covenants or IPR---affect the investment in knowledge capital when contracts are not enforceable. These barriers lower the competition for human capital and reduce the incentive to accumulate knowledge. We show in a dynamic general equilibrium model that this mechanism has the potential to account for significant cross-country income inequality.

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Document Object Identifier (DOI): 10.3386/w12474

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