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Monopoly rights can reduce income big time

  • Berthold Herrendorf
  • Arilton Teixeira

We study a two sector version of the newclassical growht model with coalitions of factors suppliers in the capital producing sectors. We show that if the coalition have monopoly rights, then they block the adoption of the efficient technology. We also show that blocking leads to a decrease in the productivity of each capital producing sector and to an increase in the relative price of capital; as a result the capital stock and production fall in each sector. We finally show that the implied fall in the level of per capita income can be large quantitatively

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Winter Meetings with number 373.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nawm04:373
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