Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099339 | Journal of Economic Dynamics and Control | 2008 | 29 Pages |
Abstract
This paper introduces consumption externalities into one of the base line models of growth in which continuing expansion of product variety sustains long-term growth. We assume that consumers set a benchmark stock of consumption for each good so that there are commodity-specific external effects. Each good is produced by a monopolistically competitive firm and the firm exploits the presence of consumption external effects in determining its profit-maximizing price. Given those settings, we show that the introduction of consumption externalities may affect the balanced-growth characterization, transitional dynamics and policy effects in fundamental manners.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Junko Doi, Kazuo Mino,