Endogenous Growth and Intermediation in an 'Archipelago' Economy
AbstractA general equilibrium model based on the parable of an economy of many islands shows that market imperfections in the intermediation activity affect economic growth and possibly prevent take-off into sustained growth. The inhabitants of different islands accumulate heterogeneous assets and transportation-type intermediation allows for better allocation of the productive resources. The development process is accompanied by a reduction in intermediation costs, which induces firms to adopt more efficient techniques and sustains economic growth. A laissez-faire economy suffers from two distortions: the existence of market imperfections and a 'thick market' externality. Copyright 1994 by Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 104 (1994)
Issue (Month): 423 (March)
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- F Zilibotti, 1993. "Endogenous Growth and Intermediation in an Archipelago Economy," CEP Discussion Papers dp0167, Centre for Economic Performance, LSE.
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