Public Capital and Imperfect Competition with Endogenous Growth

14 Pages Posted: 20 Nov 2010  

Chang Shu-Hua

National Tai-Chung Institute of Technology - Department of Public Finance & Taxation

Date Written: November 20, 2010

Abstract

This paper sets up an endogenous growth model in which public capital is a productive input and where the intermediate goods sector is characterized by monopolistic competition. The model is used to examine the effects of monopoly power, and the taxation policy on the economic growth rate. Three major findings emerge from our analysis. First, an increase in monopoly power may enhance economic growth. Second, the capital income tax policy has an ambiguous effect on the economic growth rate. Third, a higher labor income tax rate will always increase the economic growth rate.

Keywords: Endogenous Growth, Imperfect Competition, Public Capital

JEL Classification: D43, O41

Suggested Citation

Shu-Hua, Chang, Public Capital and Imperfect Competition with Endogenous Growth (November 20, 2010). Available at SSRN: https://ssrn.com/abstract=1712181 or http://dx.doi.org/10.2139/ssrn.1712181

Chang Shu-Hua (Contact Author)

National Tai-Chung Institute of Technology - Department of Public Finance & Taxation ( email )

No.129, Sec. 3, San-min Rd., Taichung,Taiwan
Taichung, 404
Taiwan

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