Increasing returns, imperfect competition and factor prices

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  • dc.contributor.author Epifani, Paoloca
  • dc.contributor.author Gancia, Gino A.ca
  • dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
  • dc.date.accessioned 2017-07-26T10:50:12Z
  • dc.date.available 2017-07-26T10:50:12Z
  • dc.date.issued 2004-07-01
  • dc.date.modified 2017-07-23T02:10:28Z
  • dc.description.abstract We show how, in general equilibrium models featuring increasing returns, imperfect competition and endogenous markups, changes in the scale of economic activity affect income distribution across factors. Whenever final goods are gross-substitutes (gross- complements), a scale expansion raises (lowers) the relative reward of the scarce factor or the factor used intensively in the sector characterized by a higher degree of product differentiation and higher fixed costs. Under very reasonable hypothesis, our theory suggests that scale is skill-biased. This result provides a microfoundation for the secular increase in the relative demand for skilled labor. Moreover, it constitutes an important link among major explanations for the rise in wage inequality: skill-biased technical change, capital-skill complementarities and international trade. We provide new evidence on the mechanism underlying the skill bias of scale.
  • dc.format.mimetype application/pdfca
  • dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=953
  • dc.identifier.citation Review of Economics and Statistics 88, 583-598, 2006
  • dc.identifier.uri http://hdl.handle.net/10230/981
  • dc.language.iso eng
  • dc.relation.ispartofseries Economics and Business Working Papers Series; 953
  • dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
  • dc.rights.accessRights info:eu-repo/semantics/openAccess
  • dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
  • dc.subject.keyword endogenous markups
  • dc.subject.keyword pro-competitive e¤ect
  • dc.subject.keyword income distribution
  • dc.subject.keyword trade models with imperfect competition
  • dc.subject.keyword wage inequality
  • dc.subject.keyword Macroeconomics and International Economics
  • dc.title Increasing returns, imperfect competition and factor pricesca
  • dc.type info:eu-repo/semantics/workingPaper