Economic Systems and Economic Growth

Haiwen Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: In a planned economy, state monopoly ensures that economies of scale are exploited. However, state monopoly could not commit to reward its workers. Anticipating this, individuals will exert less effort. In a market economy, competition among firms ensures that higher effort from workers will be rewarded. However, competition means that economies of scale are not fully exploited. Per capita output growth is generated by continuous adoption of new technologies substituting labor for capital. Growth rate in a market economy is higher than that in a planned economy when the incentive to exert effort is relatively more important.

Keywords: Market economy; Planned economy; Economic growth; Competition; Monopoly (search for similar items in EconPapers)
JEL-codes: O40 P50 (search for similar items in EconPapers)
Date: 2018-06-08
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Atlantic Economic Journal 3.39(2011): pp. 217-229

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Journal Article: Economic Systems and Economic Growth (2011)
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