We present a model of economic growth driven by horizontal innovation in which, unlike the existing literature, the final output sector employs a non-specified, non-CES, additive production function. Our motivation in conducting such analysis is based on the recognition that the use of a CES aggregate production function in the final output sector leads to the unrealistic conclusion that the gross markup of price over marginal costs set in the monopolistically-competitive intermediate sector is constant. We derive necessary and sufficient conditions for an equilibrium with perfect competition in the final output market to exist even in the presence of a non-CES technology. These conditions generalize the usual properties of the CES case. We also analyze the long-run relation between economic growth and variable markups.
|Titolo:||Horizontal differentiation and economic growth under Non-CES aggregate production function|
|Parole Chiave:||Endogenous growth; Horizontal differentiation; Non-CES production functions; Variable markups|
|Settore Scientifico Disciplinare:||Settore SECS-P/01 - Economia Politica|
|Data di pubblicazione:||2016|
|Data ahead of print / Data di stampa:||20-giu-2016|
|Digital Object Identifier (DOI):||10.1007/s00712-016-0497-1|
|Appare nelle tipologie:||01 - Articolo su periodico|