Factor-augmenting technology choice and monopolistic competition
AbstractWe put forward a tractable, interpretable, and easily generalizable framework for modeling endogeneous factor-augmenting technology choice by monopolistically competitive firms. The setup is framed within the standard Dixit and Stiglitz (1977) model of monopolistic competition. Optimal technology choice is made here either by final goods producers or (differentiated) intermediate goods producers. These two cases have different implications for the distribution of output but they yield the same aggregate level of output, the same aggregate production function, and equivalent macroeconomic dynamics. Thanks to this property, the proposed framework can be used as a building block in a variety of embedding structures, including those which require to be solved recursively (separately for the dynamics of aggregate variables and for the distribution in each time period).
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Bibliographic InfoPaper provided by National Bank of Poland, Economic Institute in its series National Bank of Poland Working Papers with number 129.
Date of creation: 2012
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More information through EDIRC
optimal technology choice; monopolistic competition; normalized CES production function; aggregation;
Other versions of this item:
- Jakub Growiec, 2012. "Factor-Augmenting Technology Choice and Monopolistic Competition," DEGIT Conference Papers c017_038, DEGIT, Dynamics, Economic Growth, and International Trade.
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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