Comment on "Productive Public Expenditure and Imperfect Competition with Endogenous Price Markup"

Luis Costa and Nuno Palma

MPRA Paper from University Library of Munich, Germany

Abstract: In this note we show that the claim from Chen et al (2005) that their model generates an endogenous markup is incorrect. This is not only a nomenclature issue: using the �fixed markup which we show to be the only one consistent with the structure of the model implies the main conclusions in that paper do not hold. In particular, government expenditure in infrastructure cannot affect the business cycle in this model by deliberately changing the market structure of the economy.

Keywords: Endogenous; markup (search for similar items in EconPapers)
JEL-codes: E10 E62 H54 (search for similar items in EconPapers)
Date: 2006-10-16, Revised 2007-06-08
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Citations: View citations in EconPapers (2)

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Working Paper: Productive Public Expenditure and Imperfect Competition with Endogenous Price Markup: Comment (2006)
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