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Endogenous Market Structure and Fiscal Policy in an Endogenous Growth Model with Public Capital

  • Toshiki Tamai

    ()

    (Graduate School of Economics, Nagoya University)

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.

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File URL: http://www.accessecon.com/pubs/EB/2006/Volume15/EB-06O10007A.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2006)
Issue (Month): 11 ()
Pages: 1-10

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Handle: RePEc:ebl:ecbull:eb-06o10007
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  1. Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
  2. Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-25, December.
  3. Hassan Molana & Junxi Zhang, 1999. "Market Structure and Fiscal Policy Effectiveness," Dundee Discussion Papers in Economics 104, Economic Studies, University of Dundee.
  4. 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.
  5. Coto-Martinez, Javier, 2006. "Public capital and imperfect competition," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 349-378, January.
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