Horizontal innovation, market power and growth

In this paper, we build a general model of horizontal product innovation and economic development, taking explicitely into account the most relevant insights stemming from the recent literature on this topic. What results from our analysis is that, when innovation is both deterministic and horizontal, the relationship between market power and aggregate growth is not robust at all. We also find that not only technology, but also the intersectoral competition for human capital, matters for growth. This is particularly relevant in terms of public policies aimed at the strategic allocation of skilled workers to the different sectors of the economy.Endogenous Growth, Horizontal Product Differentiation, Market Power, Technological Change