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Article Dans Une Revue Research in Economics Année : 2005

Does imperfect competition foster capital accumulation in a developing economy ?

Résumé

We analyze the relationship between imperfect competition and capital accumulation in a dual economy, with traditional and modern sectors and two types of agents (workers and capitalists). Workers allocate their time endowment between the two sectors. Capitalists
accumulate wealth in the modern sector. The economy is open to capital flows, but capitalists face borrowing constraints. Non-competitive behavior of capitalists results in a rent which is extracted from the workers and lowers employment in the modern sector. In the longrun,
if capitalists are unconstrained, imperfect competition is beneficial for capital accumulation and growth, while it is detrimental in the converse case. Moreover, not-binding borrowing constraints lead to higher employment and wages. This can motivate the introduction of a subsidy on bequests which allows the economy to reach the
unconstrained regime, and is welfare-enhancing for workers.
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Dates et versions

halshs-00268842 , version 1 (01-04-2008)

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Pascal Belan, Philippe Michel, Bertrand Wigniolle. Does imperfect competition foster capital accumulation in a developing economy ?. Research in Economics, 2005, 59 (2), pp.189-208. ⟨10.1016/j.rie.2005.04.006⟩. ⟨halshs-00268842⟩
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