(DP 1995-05) Competition and The Competitiveness of Organizations and Nations

Abstract

We show that increased breadth and/or depth of inter-firm competition among teams or partnerships leads to higher worker effort and thus to greater competitiveness. An industry with greater domestic competition will produce firms more competitive than its counterparts in other countries. This is part from the birth and death process among competing firms. We also show that increased moral hazard and team size reduce effort and competitiveness.