Resource Abundance, Market Size, and the Choice of Technology

Haiwen Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: How resource abundance and market size affect the choice of increasing returns technologies is studied in an overlapping-generations general equilibrium model in which manufacturing firms engage in oligopolistic competition. The model is surprisingly tractable. First, for the steady state, the wage rate, the level of technology, and capital stock are not affected by the amount of natural resources. An increase in the share of agricultural revenue going to natural resources leads to a lower wage rate and firms choose less advanced technologies. Second, an increase in market size increases the equilibrium wage rate, level of technology, and capital stock. Finally, other things equal, a country with a lower endowment of natural resources or a higher market size has a comparative advantage in producing the manufactured good.

Keywords: Technology choice; resource abundance; specific-factors model; overlapping-generations model; increasing returns (search for similar items in EconPapers)
JEL-codes: F10 N60 O14 (search for similar items in EconPapers)
Date: 2019-04-04
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (7)

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Journal Article: Resource abundance, market size, and the choice of technology (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93096

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