Product Market Competition, Investment and Employment-Abundant Versus Job-Poor Growth: A Real Options Perspective

32 Pages Posted: 7 Nov 2005

See all articles by Yu-Fu Chen

Yu-Fu Chen

University of Dundee - Department of Economic Studies

Michael Funke

University of Hamburg - Department of Economics; Tallinn University of Technology (TUT)

Date Written: October 2005

Abstract

The role of product market reforms in achieving the objective of higher employment and growth has recently received much attention amongst academics. The aim of this paper is to analyse some of the channels through which cross-market effects come about and to assess their policy relevance. The analytic strategy of this paper relies upon the stochastic real options modelling approach. In a nutshell, our simulations using numerical methods indicate that comprehensive product market reforms would increase factor demand and growth significantly in the medium and long run.

Keywords: product market competition, regulation, real options, investment, employment

JEL Classification: C61, D81, D92, J23, L51

Suggested Citation

Chen, Yu-Fu and Funke, Michael, Product Market Competition, Investment and Employment-Abundant Versus Job-Poor Growth: A Real Options Perspective (October 2005). CESifo Working Paper Series No. 1563, Available at SSRN: https://ssrn.com/abstract=843424 or http://dx.doi.org/10.2139/ssrn.843424

Yu-Fu Chen

University of Dundee - Department of Economic Studies ( email )

Dundee DD1 4HN, Scotland
United Kingdom
+44 1382 344 383 (Phone)
+44 1382 344 691 (Fax)

Michael Funke (Contact Author)

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

Tallinn University of Technology (TUT) ( email )

Ehitajate tee 5
Tallinn, 12618
Estonia

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