Love Of Variety And Scale Implications: An Empirical Evaluation
AbstractFollowing the empirical work of Jones (1995a,b) that test the scale effects predicted by the AK models and the R&D based models, this paper tests the scale effects of a major new trade model, the Krugman (1979) version of the Dixit-Stiglitz (1977) model, using the Yang-Heijdra (1993) formula for own price elasticity of demand. Time series data from six economies are used to test the relationships between the average size of firms, population and per capita income. The results show that the scale effects predicted by the revised Krugman model are incompatible with empirical evidence.
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Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Division of Labor & Transaction Costs.
Volume (Year): 01 (2006)
Issue (Month): 02 ()
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Web page: http://www.worldscinet.com/dltc/dltc.shtml
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- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
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- F - International Economics
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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