The Market Size Effect în Formation îf Business Sector ànd Inequality Level Among Individuals Under Inelastic Production of Each Firm
Dmitriy Aleksandrovich Pokrovskiy
Additional contact information
Dmitriy Aleksandrovich Pokrovskiy: National Research University Higher School of Economics
Authors registered in the RePEc Author Service: Dmitry Pokrovsky
Spatial Economics=Prostranstvennaya Ekonomika, 2015, issue 2, 12-30
Abstract:
This paper is addressed to explanation of impact of market size on selection into entrepreneurship and inequality within two-sector economy with secluded good, populated by individuals with additively-separable preferences, defined by power specification of utility function. Individuals are differentiated by two characteristics: productivity and type of variety, which can be potentially produced by given individual if he or she chooses entrepreneurial activity instead of salaried work. Each entrepreneur can produce only one unit of givenindividual characteristics specific variety. The specific variety are produced not unique producer, but for any type of entrepreneurial ability there are individuals with given ability, who produce the same variety. Number of such producers is defined by distribution of entrepreneurial abilities. Anyone of entrepreneurs producing the given type of variety has no market power and sells the variety by market price. From the other side, under giventype of entrepreneurial abilitywhole range of varieties are produced by different entrepreneurs with given entrepreneurial ability. As far cost of production depends on entreprenurial ability, the prices charged by entrepreneurs with the same ability are equal. Such specification of market structure allows consider symmetric equilibrium in terms of prices. The main result oàthe model is nontrivial impact of market size on outcome: the bigger number of population, the less share of salaried workers, the hire prices and the economy is more unequal.
Keywords: åntrepreneurship; ?; distribution; of; abilities; ?; two-dimensional; heterogeneity; of; individuals; ?; inelastic; production; ?; income; inequality; ?; effect; of; market; size (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.spatial-economics.com/images/spatial-ec ... 0.Pokrovskiy.pdf.pdf (application/pdf)
http://spatial-economics.com/eng/arkhiv-nomerov/20 ... /686-SE-2015-2-12-30 (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:far:spaeco:y:2015:i:2:p:12-30
DOI: 10.14530/se.2015.2.012-030
Access Statistics for this article
Spatial Economics=Prostranstvennaya Ekonomika is currently edited by Pavel Minakir
More articles in Spatial Economics=Prostranstvennaya Ekonomika from Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia) Contact information at EDIRC.
Bibliographic data for series maintained by Sergey Rogov ().