De-industrialisation and entrepreneurship under monopolistic competition

Arbeitspapier

This paper offers a new mechanism to explain de-industrialisation in response to a price increase of the manufactured good. In our trade model, one sector (agriculture) is perfectly competitive while the other (manufacturing) is monopolistically competitive. Both industries use skilled and unskilled labour as inputs. Entry into manufacturing requires a fixed cost in terms of skilled labour only. A rise in the market price for the differentiated goods raises both marginal revenue and the price of skilled labour, which affects the marginal cost of production and the entry cost. When short-run profits increase so that new manufacturing firms enter, fewer skilled workers are available for production purposes. This, in turn, may then lead to a decline in total manufacturing output. Our theoretical mechanism is jointly consistent with recent empirical observations on pre-mature deindustrialization characterizing several Latin American and Asian countries, and productive diversification as observed in various developing economies.

Angaben zum Objekt

• ISBN: 978-3-86304-169-4
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: DICE Discussion Paper ; No. 170

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
• Thema: entrepreneurship ; monopolistic competition ; de-industrialisation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Schweinberger, Albert G. ; Suedekum, Jens
• Ereignis: Veröffentlichung
• (wer): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (wo): Düsseldorf
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/106524
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ