Cost reduction, entry, and the interdependence of market structure and economic growth

Article Abstract:

The interrelationship between market structure and economic growth was analyzed using a one-sector economy model in which oligopolistic firms sell differentiated consumption goods. The model also assumes that firms run in-house R&D programs to generate a continuous flow of cost-reduction strategies over time. Results showed that there exists a trade-off between economic growth and the number of firms. The conclusion is that taking into account the mechanisms of market structure improves understanding of long-run economic growth.

Administration of Urban Planning and Community and Rural Development, Economic Development NEC, Econometrics & Model Building, Econometrics, Markets (Economics), Consumer goods, Business models, Oligopolies

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Product diversity, endogenous markups, and development traps

Article Abstract:

The effects of endogenous markups for the dynamics of capital accumulation, in a situation where the degree of competition rises with economic development, are investigated. Findings revealed that markups are inversely proportional to the aggregate capital stock during equilibrium. Hence, the marginal revenue product of capital maybe nonmonotonic even if the marginal product of capital is only decreasing. It is therefore possible to have several steady states and equilibrium paths for given initial situations.

Research, Economic aspects, Equilibrium (Economics), Markup

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