Endogenous Growth and Poverty Traps in a Cournotian Model

Jordi Galí and Fabrizio Zilibotti

No 1052, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyse the implications for the dynamics of capital accumulation of market power and endogenous demand elasticities, in an environment in which the latter are affected by the number of competitors in each industry. In equilibrium the interest rate increases as capital accumulates, even though the marginal product of capital is constant. Under standard assumptions both a steady-state and a balanced growth path exist, and the possibility of multiple equilibrium paths (for given initial conditions) arises. It is argued that the latter feature matches several empirical observations.

Keywords: Endogenous Growth; Endogenous Mark-ups; Multiple Equilibria (search for similar items in EconPapers)
JEL-codes: L13 O41 (search for similar items in EconPapers)
Date: 1994-11
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Endogenous Growth and Poverty Traps in a Cournotian Model (1995)
Working Paper: Endogenous growth and poverty traps in a Cournotian model (1993)
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