Endogenous Growth and Competitive Markets

Mich Tvede and Martin Jensen

No 00-14, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: In the present paper, an optimal growth model for which transformation possibilities are supposed to be bounded in the short run and unbounded in the long run - maybe due to adjustment costs or accummulation costs - is considered. It is shown that equilibria exist and that equilibrium allocations are Pareto optimal and exhibit perpetual growth. The model of the present paper combines features of models with increasing returns to scale and externalities and features of models with constant returns to scale in the sense that it is capable of explaining why different countries experience different growth patterns and that equilibrium allocations are Pareto optimal.

Keywords: Endogenous Growth; Optimal Growth; Pareto Optimality; Perpetual Growth (search for similar items in EconPapers)
JEL-codes: D9 E2 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2000-11
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0014

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