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Social conflict, growth and factor shares

  • Tsoukis, Christopher
  • Tournemaine, Frederic

Standard growth theory is based on atomistic agents with no strategic interactions among them. In contrast, we model growth as resulting from a one-off, strategic game between workers and owners of capital (capitalists) on factor shares, in an otherwise standard AK growth model. The resulting distribution of income between factors further determines the marginal revenue product of capital and the rate of growth. We analyse the properties of four equilibria: competitive, Stackelberg equilibrium, a hybrid non-cooperative regime, and cooperative (Nash) solution. We show that our model provides a potentially richer view of the growth process than comparable models, and endogenises a key aspect of the social contract.

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File URL: https://mpra.ub.uni-muenchen.de/23365/3/MPRA_paper_23365.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23365.

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Date of creation: 18 Jun 2010
Date of revision: 20 Jun 2010
Handle: RePEc:pra:mprapa:23365
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