Externalities, Endogenous Productivity, and Poverty Traps
نویسندگان
چکیده
We present a version of the neoclassical model with an endogenous industry structure. We obtain multiple steady-state equilibria with an arbitrarily small degree of increasing returns to scale. While the most productive rms operate across all the steady states, in a poverty trap less productive rms operate as well. This results in lower average rm productivity and total factor productivity. A calibrated version of our model displays sizable di¤erences in TFP and output across steady state equilibria. JEL: L16, O11, O33, O40
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