Mark-ups, economies of scale and the role of knowledge spillovers in OECD industries

  • Brandt N
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Using R&D-based models of economic growth as a foundation, this paper argues that market-driven knowledge creation is necessarily linked as an engine of productivity growth to economies of scale and market-power. A cost function and factor demand model is applied to a cross-country industry data set to study market-power, economies of scale and the role of knowledge in an integrated approach. Empirical results reveal the presence of market-power and economies of scale in all of the industries investigated. R&D and spillovers explain some of the productivity growth observed. Spillovers are identified as an external source of economies of scale. © 2007 Elsevier B.V. All rights reserved.

Author-supplied keywords

  • Economic growth
  • Error correction models
  • Knowledge spillovers
  • Market power
  • OECD industries
  • Technological change

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  • Nicola Brandt

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