Premium
Immiserizing Growth in a Closed Economy
Author(s) -
Krishna Kala,
Yavas Cemile
Publication year - 2004
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.0347-0520.2004.00352.x
Subject(s) - economics , monopoly , consumption (sociology) , redistribution (election) , microeconomics , market power , social science , sociology , politics , political science , law
We develop a model with three key features: a factor market distortion, monopoly power in the product market and indivisibilities in consumption. In this setting, multiple equilibria arise, one with high and the other with low equilibrium wages, incomes and output. It is also shown that even in a closed economy, growth may be immiserizing and, finally, that redistribution could be a “rich man's game”.