Corporate governance, competition policy and industrial policy

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