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Endogenous Market Structure, Occupational Choice, And Growth Cycles

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  • Varvarigos, Dimitrios
  • Gil-Moltó, Maria José

Abstract

We model an industry that supplies intermediate goods in a growing economy. Agents can choose whether to provide labour or to become firm owners and compete in the industry. The idea that entry is determined through occupational choice has major implications for the economy’s intrinsic dynamics. Particularly, the results show that economic dynamics are governed by endogenous volatility in the determination of both the number of industry entrants and in the growth rate of output. Consequently, we argue that occupational choice and the structural characteristics of the endogenous market structure can act as both the impulse source and the propagation mechanism of economic fluctuations.
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Suggested Citation

  • Varvarigos, Dimitrios & Gil-Moltó, Maria José, 2016. "Endogenous Market Structure, Occupational Choice, And Growth Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 20(01), pages 70-94, January.
  • Handle: RePEc:cup:macdyn:v:20:y:2016:i:01:p:70-94_00
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    References listed on IDEAS

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    1. Colciago, Andrea & Etro, Federico, 2010. "Real business cycles with Cournot competition and endogenous entry," Journal of Macroeconomics, Elsevier, pages 1101-1117.
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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