Factor-augmenting technology choice and monopolistic competition

Jakub Growiec

No 129, NBP Working Papers from Narodowy Bank Polski

Abstract: We put forward a tractable, interpretable, and easily generalizable framework for modeling endogeneous factor-augmenting technology choice by monopolistically competitive firms. The setup is framed within the standard Dixit and Stiglitz (1977) model of monopolistic competition. Optimal technology choice is made here either by final goods producers or (differentiated) intermediate goods producers. These two cases have different implications for the distribution of output but they yield the same aggregate level of output, the same aggregate production function, and equivalent macroeconomic dynamics. Thanks to this property, the proposed framework can be used as a building block in a variety of embedding structures, including those which require to be solved recursively (separately for the dynamics of aggregate variables and for the distribution in each time period).

Keywords: optimal technology choice; monopolistic competition; normalized CES production function; aggregation (search for similar items in EconPapers)
JEL-codes: E23 E25 O41 (search for similar items in EconPapers)
Pages: 24
Date: 2012
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Factor-augmenting technology choice and monopolistic competition (2013)
Working Paper: Factor-Augmenting Technology Choice and Monopolistic Competition (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpmis:129

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