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Inter-Industrial Factor Allocation in the Short and Long Runs in Chamberlinian Monopolistic Competition

Author

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  • Hiroshi Goto

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This study reviews the allocation of factors among industries distinguishing between the short run and long run in a monopolistically competitive world. Without any conditions on scale economy, non-homotheticity, and factor intensity, it is shown that the long-run equilibrium characterized by factor-price equalization between industries is always locally stable. In addition, the direction of non-homothetic bias does not have qualitative effects on the allocation of factors, while it works as key elements to determine the direction of the change in relative industry size. The direction of the change in factor allocation mainly depends on the gross substitutability of factors which is magnified by non-homotheticity and scale economies.

Suggested Citation

  • Hiroshi Goto, 2015. "Inter-Industrial Factor Allocation in the Short and Long Runs in Chamberlinian Monopolistic Competition," Discussion Paper Series DP2015-36, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2015-36
    as

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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2015-36.pdf
    File Function: First version, 2015
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Non-homotheticity; Scale economy; Factor intensity; Elasticity of substitution;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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