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Product Market Competition, Investment and Employment-Abundant versus Job-Poor Growth: A Real Options Perspective

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Listed author(s):
  • Yu-Fu Chen
  • Michael Funke

Abstract

The role of product market reforms in achieving the objective of higher employment and growth has recently received much attention amongst academics. The aim of this paper is to analyse some of the channels through which cross-market effects come about and to assess their policy relevance. The analytic strategy of this paper relies upon the stochastic real options modelling approach. In a nutshell, our simulations using numerical methods indicate that comprehensive product market reforms would increase factor demand and growth significantly in the medium and long run.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1563.

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Date of creation: 2005
Handle: RePEc:ces:ceswps:_1563
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Keywords: product market competition; regulation; real options; investment; employment;

Other versions of this item:

Find related papers by JEL classification:
  • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
  • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
  • D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
  • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
  • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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Cited by:

  1. Yu-Fu Chen & Michael Funke, 2010. "Booms, Recessions And Financial Turmoil: A Fresh Look At Investment Decisions Under Cyclical Uncertainty," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(s1), pages 290-317, 07.
  2. Posch, Olaf, 2009. "Structural estimation of jump-diffusion processes in macroeconomics," Journal of Econometrics, Elsevier, vol. 153(2), pages 196-210, December.
  3. Chen, Yu-Fu & Funke, Michael, 2009. "China's new Labour Contract Law: No harm to employment?," China Economic Review, Elsevier, vol. 20(3), pages 558-572, September.
  4. Chen Yu-Fu & Funke Michael, 2009. "Threshold Effects of Dismissal Protection Regulation and the Emergence of Temporary Work Agencies," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 13(4), pages 1-29, September.

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