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Imperfect competition, technical progress and capital accumulation

This paper explores the consequences of imperfect competition on capital accumulation. The framework is an OLG growth model with altruistic agents. Two types of long run equilibria exist : egoistic or altruistic.We assume both competitive and non-competitive firms exist, the latter being endowed with more productive technology. They behave strategically on the labor market : they take into account the impact of their demand for labor on the equilibrium wage and on their profit. The effect of technical progress for a non-competitive firm depends on the initial productivity of the firm and on the type of steady state (egoistic or altruistic). An increase in the productivity of the most productive firm has a negative impact on capital accumulation in an egoistic steady state, and a positive one in an altruistic steady state. An increase in the productivity of the competitive sector can have various effects on capital accumulation. If the productivity levels of the non-competitive firms are close enough, capital accumulation increases in an egoistic steady state and decreases in an altruistic one. But, the impact of increasing productivity in the competitive sector can be reversed if the productivity of the less productive non-competitive firm is low enough.

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Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v06046a.

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Length: 19 pages
Date of creation: May 2006
Date of revision: Dec 2006
Handle: RePEc:mse:wpsorb:v06046a
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  1. Sorger, Gerhard, 2002. "On the Long-Run Distribution of Capital in the Ramsey Model," Journal of Economic Theory, Elsevier, vol. 105(1), pages 226-243, July.
  2. Pascal Belan & Philippe Michel & Bertrand Wigniolle, 2005. "Does imperfect competition foster capital accumulation in a developing economy ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00193985, HAL.
  3. Jaskold Gabszewicz, Jean & Vial, Jean-Philippe, 1972. "Oligopoly "A la cournot" in a general equilibrium analysis," Journal of Economic Theory, Elsevier, vol. 4(3), pages 381-400, June.
  4. CODOGNATO, Giulio & GABSZEWICZ, Jean J., . "Cournot-Walras equilibria in markets with a continuum of traders," CORE Discussion Papers RP 1041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  6. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May.
  7. Bertrand Wigniolle & Philippe Michel & Pascal Belan, 2002. "Pension funds and capital accumulation," Economics Bulletin, AccessEcon, vol. 4(1), pages 1-8.
  8. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
  9. Becker, Robert A. & Foias, Ciprian, 2007. "Strategic Ramsey equilibrium dynamics," Journal of Mathematical Economics, Elsevier, vol. 43(3-4), pages 318-346, April.
  10. repec:ebl:ecbull:v:4:y:2002:i:1:p:1-8 is not listed on IDEAS
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