Does imperfect competition foster capital accumulation in a developing economy ?

Pascal Belan (), Philippe Michel and Bertrand Wigniolle

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Abstract: We analyze the relationship between imperfect competition and capital accumulation in a dual economy, with traditional and modern sectors and two types of agents (workers and capitalists). Workers allocate their time endowment between the two sectors. Capitalistsaccumulate wealth in the modern sector. The economy is open to capital flows, but capitalists face borrowing constraints. Non-competitive behavior of capitalists results in a rent which is extracted from the workers and lowers employment in the modern sector. In the longrun,if capitalists are unconstrained, imperfect competition is beneficial for capital accumulation and growth, while it is detrimental in the converse case. Moreover, not-binding borrowing constraints lead to higher employment and wages. This can motivate the introduction of a subsidy on bequests which allows the economy to reach theunconstrained regime, and is welfare-enhancing for workers.

Keywords: imperfect competition; capital accumulation; altruism (search for similar items in EconPapers)
Date: 2005-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00268842v1
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Citations: View citations in EconPapers (6)

Published in Research in Economics, 2005, 59 (2), pp.189-208. ⟨10.1016/j.rie.2005.04.006⟩

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Related works:
Journal Article: Does imperfect competition foster capital accumulation in a developing economy? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy ? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy ? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy ? (2005)
Working Paper: Does imperfect competition foster capital accumulation in a developing economy (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00268842

DOI: 10.1016/j.rie.2005.04.006

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