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Monopolistic Competition, Resource Allocation and the Effects of Industrial Policy

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Abstract

An indicator of allocation effects of industrial policy is derived from a theoretical framework of monopolistic competition. The indicator gives a qualitative picture of how industrial policy affects industry structure and resource allocation, it identifies the policy measures that work as industry assistance under various assumptions about underlying parameters, and it allows a consistent comparison of the assistance effects of different measures. Indicator calculations of industrial policy represent an efficient alternative to numerical general equilibrium analyses, especially in international comparisons. Illustrative indicator calculations of Norwegian industrial policy are presented.

Suggested Citation

  • Torbjørn Hægeland, 1996. "Monopolistic Competition, Resource Allocation and the Effects of Industrial Policy," Discussion Papers 161, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:161
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp_161.pdf
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    Keywords

    Industry assistance; allocation effects; monopolistic competition; Norway.;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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