Over-simplification and tractability in quasi-linear neg models
AbstractAn inconsistency is found in the demand side of the NEG models developed in PflÃ¼ger (2004) that follows from the absence of a non-negativity constraint on the consumption of agricultural goods. This seriously weakens the results of the original paper and those of ensuing contributions in PflÃ¼ger and SÃ¼dekum (2008a,b). A solution to this problem is developed which imposes severe restrictions on the relative size of two of the core model parameters, the implications of which are examined.
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Bibliographic InfoPaper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-14.
Date of creation: 2009
Date of revision:
Other versions of this item:
- John Pierson & Sylvain Barde, 2009. "Over-simplification and tractability in quasi-linear neg models," Sciences Po publications 2009-14, Sciences Po.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-26 (All new papers)
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"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
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- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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