Growth and ideas in a perfectly competitive world.

• Ideas, increasing returns to scale and perfect competition are compatible. • Innovation can be remunerated even if rival inputs exhaust output. • Whether innovations are competitive or thrive under monopolistic competition does not constitute an engine driving long-run growth. Are ideas, increasing returns to scale, and perfect competition compatible? To address this fundamental question, I build a purposefully simple model of growth and ideas with two salient features: (i) firms raise capital from shareholders, and (ii) the production function shows decreasing returns to scale in the stock of ideas and in labor. I obtain two noticeable results from this model. First, contrary to conventional wisdom, I show that ideas, increasing returns to scale, and a competitive equilibrium are tenable. Second, I underline that the model has a balanced growth equilibrium similar to the one founded in the semi-endogenous models. [ABSTRACT FROM AUTHOR]