CORPORATE GOVERNANCE, COMPETITION POLICY AND INDUSTRIAL-POLICY

This paper shows that introducing agency considerations into a model o f innovations and growth can have radical consequences as to the effec ts of competition policy and industrial policy on the rate of technolo gical change. Whilst competition policy (resp. industrial policy) has a negative (resp, a positive) effect on growth in a Schumpeterian mode l with profit-maximising firms, these effects are shown to be both rev ersed when agency problems within innovating firms become sufficiently important. (C) 1997 Elsevier Science B.V.