TOWARDS A GENERALISED DEFINITION OF COMPETITION

In this paper we propose a conceptual model of competition which is in line with recent developments in the economics literature. We concentrate mostly on two shortcomings identified in the past literature, namely on the process critique and on the effect of qualitative change, that we consider the heir to the product differentiation critique. Furthermore, we consider that these two shortcomings are not independent, but closely related. For example, qualitative change destabilizes the system, thus inducing a dynamics of change by which its own subsequent development is affected. The conceptual model of competition that we develop in this paper is based on a particular representation of product technology and of industrial sectors, in terms of product characteristics. By means of this representation we propose a definition of the intensity of competition that is in principle applicable empirically and useful for modelling purposes. Furthermore, we distinguish intra-sector competition from inter-sector competition, we maintain that these two types of competition interact and that both influence economic development. A part of our paper is based on the results of a model of economic development by the creation of new sectors. Finally, our model of competition allows us to discuss the relationship between competition and growth. We start our paper by means of a brief summary of the literature on competition and continue by presenting our conceptual model of competition, its analytical dimension and the implications it has for economic growth and development.

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