A Dynamic Model of the Choice of Technology in Economic Development
In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the uniq...
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Published in | Frontiers of economics in China Vol. 11; no. 3; pp. 498 - 518 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Beijing
Higher Education Press
01.09.2016
Higher Education Press Limited Company |
Subjects | |
Online Access | Get full text |
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Summary: | In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual’s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual’s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more advanced technologies and the steady-state capital stock increases. Finally, an increase in the level of subsidies to technology adoption does not change steady-state technology. |
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Bibliography: | unemployment economic development increasing returns overlapping-generations model choice of technology |
ISSN: | 1673-3444 1673-3568 |
DOI: | 10.3868/s060-005-016-0026-4 |