Monopolistic Competition in a Two-Sector Economy: The Relative Economies of Scale
Abstract
A model of a two-sector economy with monopolistic competition in the industrial sector and perfect competition in the standard sector is considered. The equilibrium of the model is found under the assumption that workers are mobile within their sectors, but cannot move from sector to sector. Consumers’ preferences are described by a general utility function. Then we investigate the relative scale effect: the response of macroeconomic variables such as demand, supply, prices and wages on changes in the employment structure between the sectors.
About the Authors
V. M. Goncharenko
Финансовый университет при Правительстве РФ
Russian Federation
Russian Federation
A. B. Shapoval
Институт теории прогноза землетрясений и математической геофизики РАН
Russian Federation
Russian Federation
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Review
For citations:
Goncharenko V.M., Shapoval A.B. Monopolistic Competition in a Two-Sector Economy: The Relative Economies of Scale. Economics of Contemporary Russia. 2015;(4):20-31. (In Russ.)
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