English, Article, Journal or magazine article edition: Start-up Costs and Pecuniary Externalities as Barriers to Economic Development Antonio Ciccone; Kiminori Matsuyama

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Start-up Costs and Pecuniary Externalities as Barriers to Economic Development
Author
  • Antonio Ciccone
  • Kiminori Matsuyama
Physical Description
  • preprint
Notes
  • We use a dynamic monopolistic competition model to show that an economy that inherits a small range of specialized inputs can be trapped into a lower stage of development. The limited availability of specialized inputs forces the final goods producers to use a labor intensive technology, which in turn implies a small inducement to introduce new intermediate inputs. The start--up costs, which make the intermediate inputs producers subject to dynamic increasing returns, and pecuniary externalities that result from the factor substitution in the final goods sector, play essential roles in the model.
  • RePEc:upf:upfgen:142
  • RePEc:nbr:nberwo:4363
  • 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 inputs can be trapped into a lower stage of development. The limited availability of specialized 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 factor substitution in the final goods sector, play essential roles in the model.
  • Economic development
  • RePEc:fip:fedmem:83
  • 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.
  • 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.
  • RePEc:nwu:cmsems:1031
Language
  • English
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