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Creating a Learning SocietyA New Approach to Growth, Development, and Social Progress$
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Joseph Stiglitz and Bruce Greenwald

Print publication date: 2014

Print ISBN-13: 9780231152143

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231152143.001.0001

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Market Structure, Welfare, and Learning

Market Structure, Welfare, and Learning

Chapter:
(p.101) Chapter Five Market Structure, Welfare, and Learning
Source:
Creating a Learning Society
Author(s):

Joseph E. Stiglitz

Bruce C. Greenwald

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231152143.003.0005

This chapter shows that the relationship between competition, innovation, and welfare in quite standard models of market interaction is far different than has been widely presumed. The first three sections explain whether and the circumstances under which the level of innovation with monopoly is greater than that in more competitive environments, even apart from imperfections in risk and capital markets. The final section examines the flaws in Joseph Schumpeter's theory of market structure, i.e. that at any one moment of time the market would be dominated by a single firm but that there would be a succession of monopolists. It shows why the monopoly power that Schumpeter seems to extol may be more persistent than he thought and why Schumpeterian competition may not suffice to lead to a dynamic, learning economy, or at least leads to an economy which is not as dynamic as it could or should be.

Keywords:   competition, innovation, monopoly, Joseph Schumpeter, market structure, learning economy, welfare, market interaction

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