Schumpeter on competition ALAIN R AY B AU T AND FRANCK SOSTHÉ
The concept of competition has always been central to economic thinking. It is not, therefore, surprising that it should have given rise to numerous debates and interpretations and continues to be a subject of controversy. Schumpeter is, without doubt, one of the economists most often called upon in this controversy. References to his work are perhaps most widespread in the context of the debate on market structure and efficiency, and here, in particular, regarding his treatment of this question in Capitalism, Socialism and Democracy (CSD).1
However, Schumpeter’s work has also been extensively influential in other areas of competition theory concerned with innovation, prices and the formation of market equilibria. This aspect of the debate has led to the formulation of different neo-Schumpeterian frameworks, such as recent models of technological competition and endogenous growth, whose main preoccupation is with the relation between static and dynamic analysis. Finally, Schumpeter’s writings are also frequently invoked to describe alternative approaches to price competition of which there are two main strands: the first of these, the evolutionary approach, develops a competition analysis based on technological diffusion and selection processes, while the second emphasises the role of institutions, organisations and structural change.