Endogenous Market Structure and Fiscal Policy in an Endogenous Growth Model with Public Capital
This paper develops an endogenous growth model with public capital and imperfect competition. In the model, we take into account monopolistic competition of intermidiate sector and endogenous determination of the number of firms in the sector by considering the fixed cost to keep production going. We show that the number of firms in intermidiate sector is affected by fiscal policy. Furthermore, it is demonstrated in the paper that market structure plays a key role in reducing the growth-maximizing tax rate.
Volume (Year): 15 (2006)
Issue (Month): 11 ()
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- Molana, Hassan & Zhang, Junxi, 2001.
" Market Structure and Fiscal Policy Effectiveness,"
Scandinavian Journal of Economics,
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- Wu, Yangru & Zhang, Junxi, 2000. "Endogenous markups and the effects of income taxation:: Theory and evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 77(3), pages 383-406, September. Full references (including those not matched with items on IDEAS)
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