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Multisector monopolistic competition model

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  • Igor Pospelov

    ()
    (Research University Higher School of Economics)

  • Stanislav Radionov

    ()
    (National Research University Higher School of Economics. Research group on macro-structural modeling of Russian economy)

Abstract

We present a natural generalization of the Dixit-Stiglitz monopolistic competition model (DSM) | we assume that there is a continuum of industries, each of them described as in DSM, and each characterized with its own elasticity of substitution. Although rms in all industries share the same level of productivity and costs, exogenous technological progress leads to non-trivial reallocations of labor and production to industries with lower elasticities of substitution. Thus the model, despite is simplicity and absence of additional assumptions about industry structure, generates the structural changes described in the economic growth literature

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Bibliographic Info

Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 34/EC/2013.

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Length: 18 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, September 2013, pages 1-18
Handle: RePEc:hig:wpaper:34/ec/2013

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Keywords: Dixit-Stiglitz model; monopolistic competition; economic growth; labor reallocations.;

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  1. Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," NBER Working Papers 12475, National Bureau of Economic Research, Inc.
  2. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 1997. "Beyond Balanced Growth," NBER Working Papers 6159, National Bureau of Economic Research, Inc.
  3. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
  4. Smulders, J.A. & Klundert, T.C.M.J. van de, 1995. "Strategies for growth in a macroeconomic setting," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153408, Tilburg University.
  5. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  6. Schröder, Philipp J.H. & Sørensen, Allan, 2012. "Firm exit, technological progress and trade," European Economic Review, Elsevier, vol. 56(3), pages 579-591.
  7. Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. repec:fth:stanho:e-92-3 is not listed on IDEAS
  9. Peretto, Pietro F, 1996. "Sunk Costs, Market Structure, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 895-923, November.
  10. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  11. 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.
  12. Gene M. Grossman & Elhanan Helpman, 1993. "Innovation and Growth in the Global Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570971, December.
  13. Evgeny Zhelobodko & Sergey Kokovin & Mathieu Parenti & Jacques‐François Thisse, 2012. "Monopolistic Competition: Beyond the Constant Elasticity of Substitution," Econometrica, Econometric Society, vol. 80(6), pages 2765-2784, November.
  14. Daron Acemoglu, 2007. "Introduction to Modern Economic Growth," Levine's Bibliography 122247000000001721, UCLA Department of Economics.
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