Indeterminacy and Increasing Returns

Indeterminacy, Business Cycles, and Modest Increasing Returns to Scale

In this paper a dynamic model of monopolistic competition with entry and exit has been presented and examined. It is shown that the model displays indeterminacy at modest degrees of increasing returns in cases where the market power in the consumption goods market and in the investment goods market diiers. Furthermore, the model is quite successful in replicating major U.S. business cycle facts...

Consumption externality and indeterminacy under increasing returns to scale and endogenous capital depreciation

Article history: Accepted 17 January 2014 Available online 15 February 2014 JEL classification: C62 E21 E22

The indeterminacy of equilibrium city formation under monopolistic competition and increasing returns

We study the indeterminacy of equilibrium in the Fujita-Krugman (1995) model of city formation under monopolistic competition and increasing returns. Both the number and the locations of cities are endogenously determined. Assuming smooth transportation costs, we examine equilibria in city-economies where a …nite number of cities form endogenously. For any positive integer K, the set of equilib...

Increasing Returns and Economic Efficiency

This paper argues that, from the viewpoint of Pareto optimality, the industries with increasing returns are under-expanded relative to those without increasing returns and those with higher degrees of increasing returns are under-expanded relative to those with lower degrees. Ignoring administrative and indirect (such as rent-seeking) costs, subsidies on goods produced under conditions of (high...

Planning, Prices and Increasing Returns