A growth model with multiple industries is developed to study how industries evolve as capital accumulates endogenously when each industry exhibits Marshallian externality (increasing returns to scale) and to explain why industrial policies sometimes succeed but sometimes fail. The authors show that, in the long run, the laissez-faire market equilibrium is Pareto optimal when the time discount rate is sufficiently small or sufficiently large. When...
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INFORMATION
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2011/09/01
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Document de travail de recherche sur les politiques
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WPS5796
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1
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1
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2011/09/01
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Disclosed
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Marshallian externality, industrial upgrading, and industrial policies
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discount rate