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.
CITATION STYLE
Brandt, N. (2007). Mark-ups, economies of scale and the role of knowledge spillovers in OECD industries. European Economic Review, 51(7), 1708–1732. https://doi.org/10.1016/j.euroecorev.2006.12.001
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