On the Degree of Scale Economies when Firms Make Technology Choice
We construct a simple model to demonstrate how the firm-level degree of scale economies (D-SE) is determined when firms make technology choice. In particular, we illustrate the importance of external factors that affect the efficiency of firms' technology choice, such as public knowledge stock, when determining D-SE. A change in public knowledge stock affects D-SE both directly and indirectly through a change in the firm's output. When output is endogenized in a monopolistic competition model with a variable mark-up rate, an increase in public knowledge stock raises D-SE through technology choice if the mark-up rate is increasing in output.
|Date of creation:||06 Sep 2017|
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- Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
- Paula Bustos, 2011.
"Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms,"
American Economic Review,
American Economic Association, vol. 101(1), pages 304-340, February.
- Paula Bustos, 2009. "Trade liberalization, exports and technology upgrading: Evidence on the impact of MERCOSUR on Argentinean firms," Economics Working Papers 1173, Department of Economics and Business, Universitat Pompeu Fabra.
- Paula Bustos, 2009. "Trade Liberalization, Exports and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinean Firms," 2009 Meeting Papers 1029, Society for Economic Dynamics.
- Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
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