Arbeitspapier
Start-up Costs and Pecuniary Externalities as Barriers to Economic Development
One critical aspect of economic development is that productivity growth and a rising standard of living are realized through more roundabout methods of production and increasing specialization of intermediate inputs and producer services. We use an extended version of the Judd-Grossman-Helpman model of dynamic monopolistic competition to show that an economy that inherits a small range of specialized uinputs can be trapped into a lower stage of development. The limited availability of specilized inputs forces the final goods producers to use a labor intensive technology, which in turns implies a small inducement to introduce new intermediate products. The start-up costs, which make the intermediate goods producers subject to dynamic increasing returns, and pecuniary externalities that result from the facto rsubstitution in the final goods sector, play essential roles in the model.
- Language
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Englisch
- Bibliographic citation
-
Series: Discussion Paper ; No. 1031
- Classification
-
Wirtschaft
Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
Macroeconomic Analyses of Economic Development
Innovation and Invention: Processes and Incentives
- Subject
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Differentiated intermediate inputs
the Hicks-Allen Complementarity
Increasing returns to to specialization
Roundabout Production
Multiple steady states
Multiple equilibria
Development traps and takes-off
Endogenous growth
- Event
-
Geistige Schöpfung
- (who)
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Ciccone, Antonio
Matsuyama, Kiminori
- Event
-
Veröffentlichung
- (who)
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Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
- (where)
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Evanston, IL
- (when)
-
1992
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ciccone, Antonio
- Matsuyama, Kiminori
- Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
Time of origin
- 1992
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