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Industrial structure and economic performance: The role of productive public expenditure

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  • Cheng‐wei Chang

Abstract

I consider productive government spending and preference for diversity in an imperfectly competitive macroeconomic framework, and analyze how differences in industrial structure affect economic growth and the welfare level. Two main findings emerge from the analysis. First, the optimal ratio of government spending is related to the extent of public expenditure externalities and preference for diversity. Second, the vertical separation regime leads to a higher economic growth rate and welfare level than the vertical integration regime, provided that the degree of monopoly power is relatively small.

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  • Cheng‐wei Chang, 2019. "Industrial structure and economic performance: The role of productive public expenditure," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 745-759, May.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:2:p:745-759
    DOI: 10.1111/rode.12562
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    Cited by:

    1. Cheng-wei Chang & Ching-chong Lai, 2021. "Optimal fiscal policies and market structures with monopolistic competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1385-1411, December.

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