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Social conflict, growth and factor shares

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  • Tsoukis, Christopher
  • Tournemaine, Frederic

Abstract

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.

Suggested Citation

  • Tsoukis, Christopher & Tournemaine, Frederic, 2010. "Social conflict, growth and factor shares," MPRA Paper 23365, University Library of Munich, Germany, revised 20 Jun 2010.
    • Handle: RePEc:pra:mprapa:23365
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    References listed on IDEAS

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    1. Social conflict and endogenous growth
      by Economic Logician in Economic Logic on 2010-07-22 19:49:00

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    Cited by:

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    2. Jan Libich & Dat Thanh Nguyen, 2022. "When a compromise gets compromised by another compromise," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 678-716, December.

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    More about this item

    Keywords

    social conflict; factor shares; growth; catching up with the Joneses;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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