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MODELS OF COMPETITION BETWEEN FIRMS: ENDOGENOUS MARKET STRUCTURE IN THE KALECKIAN MODEL
Author(s) -
Ohno Takashi
Publication year - 2013
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2012.04167.x
Subject(s) - monopolistic competition , economics , income distribution , growth model , capacity utilization , profit (economics) , wage , microeconomics , market structure , free entry , competition (biology) , endogenous growth theory , monopoly , labour economics , market economy , inequality , mathematical analysis , ecology , mathematics , biology , human capital
ABSTRACT The purpose of this paper is to incorporate free entry into the Kaleckian model. To this end, we consider a model with monopolistic competition, mark‐up pricing and a free‐entry condition. Using this model, the Kaleckian model is unstable under a wage‐led growth regime, and it is stable under a profit‐led growth regime, when the interest rate is supposed to be constant. Stability under a wage‐led growth can be achieved if the interest rate is allowed to respond positively to capacity utilization. We also find that a goods market policy, but not an income distribution policy, is then effective from an economic growth perspective.