Fazio, G.; (2010) Competition and entrepreneurship as engines of growth. Doctoral thesis , UCL (University College London).

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Abstract

The thesis aims to bridge topics traditionally belonging to different areas of the subject: competition and entrepreneurship coming from microeconomics and industrial organization; and growth, from macroeconomics. It centres around the notion that market structure and conduct affect performance and hence growth. Firms optimize by anticipating changes in consumers' demand and in suppliers' behaviour, which are a function of the market structure and its changes. Market-entry can be explained by the level of competition in a market which can be altered by the implementation of specific policies (for instance, the way a competition authority handles mergers). Failing to have an appropriate antitrust regime will ultimately harm entrepreneurship since it will affect one's ability to understand and to handle the risks associated with launching a new venture. The thesis also explores how different definitions of entrepreneurship explain varying innovation mechanisms (neck-and-neck and leapfrogging) and how this dovetails with the structure and conduct within a market. For transition economies, we find that competition policy has played a growth-enhancing role and that this effect may be larger than the impact associated with privatization, and we also find evidence of policies' complementarities. These findings are also echoed by our individual-level analysis. We analyse the determinants of high growth expectations entrepreneurial entry (HGE) using individual data drawn on working age population, based on the Global Entrepreneurship Monitor surveys for the 1998-2004 period. We find that HGE is more likely to occur when the entrepreneur perceives a gap in the market with no other producers supplying the same product. This reinforces the theory that the amount of competition faced by an entrepreneur affects the rate of HGE and also provides a microeconomic foundation for the country-level growth effects described for transition countries.

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