CAPITAL–LABOUR SUBSTITUTION AND ENDOGENOUS FLUCTUATIONS: A MONOPOLISTIC COMPETITION APPROACH WITH VARIABLE MARKUP*

Thomas Seegmuller

The Japanese Economic Review, 2009, vol. 60, issue 3, 301-319

Abstract: This paper analyses an overlapping generations model with endogenous product diversity where strategic interactions between producers are introduced; it examines how they affect the stability properties of the steady state. Because of free entry, strategic interactions between producers imply a new dynamic feature, markup variability, promoting indeterminacy and endogenous cycles. Indeed, in contrast to the model without strategic interaction, endogenous fluctuations can occur when the substitution between the production factors, capital and labour, is not too weak, but in accordance with empirical estimates.

Date: 2009
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https://doi.org/10.1111/j.1468-5876.2008.00452.x

Related works:
Working Paper: Capital-labor Substitution and Endogenous Fluctuations: a Monopolistic Competition Approach with Variable Mark-up (2009)
Working Paper: Capital-labor Substitution and Endogenous Fluctuations: a Monopolistic Competition Approach with Variable Mark-up (2009)
Working Paper: Capital-labor Substitution and Endogenous Fluctuations: a Monopolistic Competition Approach with Variable Mark-up (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jecrev:v:60:y:2009:i:3:p:301-319

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