Emergence of New Industries and Endogenous Growth Cycles

56 Pages Posted: 3 Aug 2004

See all articles by Ryo Horii

Ryo Horii

Osaka University - Institute of Social and Economic Research

Date Written: June 2000

Abstract

This paper constructs a growth model in which monopolistically competing firms choose the characteristic of their own product from an unbounded product space. While consumers wish to satisfy various needs by purchasing a diverse range of goods, production costs are lower for those goods that are more similar to existing ones because of spillover effects in the learning-bydoing process. The dynamic interaction of these centrifugal and centripetal forces on the product space leads to sporadic emergence and disappearance of industries, which is a source of cyclical fluctuations in the macroeconomic growth rate.

Keywords: Product differentiation, learning-by-doing with spillover, emergence of industries, growth cycles

JEL Classification: O41, E32, L16

Suggested Citation

Horii, Ryo, Emergence of New Industries and Endogenous Growth Cycles (June 2000). Osaka University Institute of Social and Economic Research Discussion Paper No. 510. Available at SSRN: https://ssrn.com/abstract=572024 or http://dx.doi.org/10.2139/ssrn.572024

Ryo Horii (Contact Author)

Osaka University - Institute of Social and Economic Research ( email )

1-1 Yamadaoka
Suita, Osaka 565-0871
Japan
+81 6 6879 8552 (Phone)
+81 6 6879 8583 (Fax)

HOME PAGE: http://econ.jpn.org/horii/

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