Competitive Rivalry and the Response of Markets to Innovative Opportunities

  • Paul Geroski
  • Geoffrey Stewart
Part of the Southampton Series in International Economics book series (SOSIE)


Technological change is a cumulative process in which each development opens up new opportunities for innovation. A major issue for those concerned with growth in a market economy is the ability of the economic system to respond accurately and rapidly to these new opportunities. One factor which might be expected to promote flexibility is a high degree of competition in markets. Monopoly would then be associated with sluggish and incomplete responses to the emergence of new opportunities. However, in a seminal contribution to the literature, Joseph Schumpeter (1943) argued that markets with large firms enjoying monopoly power will be the most conducive to innovation.1 The possible policy implications of this view are profound, and our goal in this paper is to evaluate its empirical basis.


Firm Size Small Firm Large Firm Market Structure Innovative Activity 
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© Sven Arndt and George McKenzie 1991

Authors and Affiliations

  • Paul Geroski
  • Geoffrey Stewart

There are no affiliations available

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