Investment and competition over the business lifecycle
Review of the existing literature on the relationship between competition and investment as a business grows.
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The Competition and Markets Authority’s Microeconomics Unit has reviewed the academic literature on the link between competition and investment over a business’ lifecycle.
Competition plays a crucial role in creating incentives for businesses to invest, but the relationship is complicated by businesses facing different competitive pressures throughout their lives. Businesses also use distinct sources of funding to invest in a variety of ways, both of which change as they grow.
This review discusses the constraints businesses face from start-up to scale-up to becoming an established business. It highlights:
- the different pressures businesses face at each stage
- what we can learn from the literature across a range of settings
- the implications for policymakers
The review presents evidence for the UK, and calls for further research on specific questions.
Email any comments or questions about this review to microeconomicsunit@cma.gov.uk, and any comments or questions about the CMA’s wider investment programme to publicpolicy@cma.gov.uk.
We have also published a policy discussion paper that explores how competition policy, together with other policy tools, can support businesses as they scale up in the UK.