The Normans Theory of Innovation?
A striking finding, whilst preparing a class for my new students in EDHEC (a French Business School located in Lille). I propose to relabel the Aghion et al. inverted U curve of innovation/competition the Normans’ theory of innovation.
A word of explanation: In my home country, France, Normans (the people from Normandy) are said to be very moderate persons. When asked a question calling for a clearcut reply, a typical norman would refuse to give a brightline answer, and rather express a soft “maybe yes, maybe not”. On close examination, the Aghion et al. inverted U curve has a taste of Normandy. Let’s rephrase the question to which those authors sought to answer in their seminal paper: ” Is competition good for innovation?” Now, let’s look at their answer: too much competition kills innovation, to little competition kills also innovation… Very Norman indeed… and only helpful to the extent that it moderates the somewhat extreme positions of Schumpeter and Arrow. But not more helpful than this.
Chillin'Competition 
It reminds me of the Laffer Curve which does say much either (contrary to what many pseudo-libertarians do think). This curve also states “too much taxation will kill tax revenue” and, at the same time “to few taxation will lower your taxation revenue”. But do not ask when taxation revenues are maximized, nobody knows…
I think Laffer was a Norman too (moreover his name contains “af” like in “Astérix and the Normans”!)
Alex
15 October 2009 at 6:16 pm