De-industrialization and entrepreneurship under monopolistic competition

Schweinberger, Albert G.; Suedekum, Jens

De-industrialization and entrepreneurship under monopolistic competition

Dateien

Schweinberger_0-308517.pdfGröße: 102.52 KBDownloads: 374

Datum

2015

Autor:innen

Schweinberger, Albert G.

Suedekum, Jens

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Zeitschriftenartikel

Publikationsstatus

Published

Erschienen in

Oxford Economic Papers. 2015, 67(4), pp. 1174-1185. ISSN 0030-7653. eISSN 1464-3812. Available under: doi: 10.1093/oep/gpv028

Zusammenfassung

This article offers a new mechanism to explain de-industrialization in response to a price increase of the manufactured good. In our trade model, one sector (agriculture) is perfectly competitive whilst the other (manufacturing) is monopolistically competitive. Both industries use skilled and unskilled labour as inputs. Entry into manufacturing requires a fixed cost in terms of skilled labour only. A rise in the market price for the differentiated goods raises both marginal revenue and the price of skilled labour, which affects the marginal cost of production and the entry cost. When short-run profits increase so that new manufacturing firms enter, fewer skilled workers are available for production purposes. This in turn may then lead to a decline in total manufacturing output. Our theoretical mechanism is jointly consistent with recent empirical observations on premature de-industrialization characterizing several Latin American and Asian countries and productive diversification as observed in various developing economies.

Fachgebiet (DDC)

330 Wirtschaft

Zitieren

ISO 690

SCHWEINBERGER, Albert G., Jens SUEDEKUM, 2015. De-industrialization and entrepreneurship under monopolistic competition. In: Oxford Economic Papers. 2015, 67(4), pp. 1174-1185. ISSN 0030-7653. eISSN 1464-3812. Available under: doi: 10.1093/oep/gpv028

BibTex

@article{Schweinberger2015Deind-33152,
  year={2015},
  doi={10.1093/oep/gpv028},
  title={De-industrialization and entrepreneurship under monopolistic competition},
  number={4},
  volume={67},
  issn={0030-7653},
  journal={Oxford Economic Papers},
  pages={1174--1185},
  author={Schweinberger, Albert G. and Suedekum, Jens}
}

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