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Models of Competition between Firms: Endogenous Market Structure in the Kaleckian Model

22 Pages Posted: 5 Jan 2013  

Takashi Ohno

Doshisha University

Date Written: February 2013

Abstract

The purpose of this paper is to incorporate free entry into the Kaleckian model. To this end, we consider a model with monopolistic competition, mark‐up pricing and a free‐entry condition. Using this model, the Kaleckian model is unstable under a wage‐led growth regime, and it is stable under a profit‐led growth regime, when the interest rate is supposed to be constant. Stability under a wage‐led growth can be achieved if the interest rate is allowed to respond positively to capacity utilization. We also find that a goods market policy, but not an income distribution policy, is then effective from an economic growth perspective.

Suggested Citation

Ohno, Takashi, Models of Competition between Firms: Endogenous Market Structure in the Kaleckian Model (February 2013). Metroeconomica, Vol. 64, Issue 1, pp. 103-124, 2013. Available at SSRN: https://ssrn.com/abstract=2196728 or http://dx.doi.org/10.1111/j.1467-999X.2012.04167.x

Takashi Ohno (Contact Author)

Doshisha University ( email )

Japan

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