Industry Dynamics and Indeterminacy in an OLG Economy with Endogenous Occupational Choice

Maria José Gil-Moltó () and Dimitrios Varvarigos ()
Authors registered in the RePEc Author Service: Maria Jose Gil Molto

No 12/09, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: We model an oligopolistic industry that supplies intermediate goods in an overlapping generations economy. Agents can choose whether to provide labour or to become entrepreneurs and compete in the industry. The idea that entry is determined through occupational choice has major implications for the industry’s dynamics. We find that the industry’s convergence to the steady state equilibrium occurs through cyclical fluctuations. Furthermore, dynamic the path of convergence is not uniquely determined, as it is partially determined by self-fulfilling expectations. These results imply that differences in economic performance may not necessarily reflect differences in either structural characteristics or initial conditions.

Keywords: Dynamic general equilibrium; Firms’ entry; Industry dynamics; Oligopoly. (search for similar items in EconPapers)
JEL-codes: D50 L11 (search for similar items in EconPapers)
Date: 2012-05, Revised 2012-09
New Economics Papers: this item is included in nep-dge and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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