External Economies of Scale and Competitive Equilibrium
TL;DR: In this article, the authors proposed a production function and producer equilibrium under laissez-faire, and analyzed consumers' surplus in terms of consumers' goods and services, and dynamic stability of the adjustment process.
Abstract: I Introduction, 347 — II Production functions and producer equilibrium, 352 — III Demand functions and supply of labor, 356 — IV Equilibrium under laissez-faire, 358 — V Ideal output, 362 — VI Taxes, bounties, and optimality rules, 366 — VII Analysis in terms of consumers' surplus, 373 — VIII Dynamic stability of the adjustment process, 381
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TL;DR: In this paper, the authors present a fully specified model of long-run growth in which knowledge is assumed to be an input in production that has increasing marginal productivity, which is essentially a competitive equilibrium model with endogenous technological change.
Abstract: This paper presents a fully specified model of long-run growth in which knowledge is assumed to be an input in production that has increasing marginal productivity. It is essentially a competitive equilibrium model with endogenous technological change. In contrast to models based on diminishing returns, growth rates can be increasing over time, the effects of small disturbances can be amplified by the actions of private agents, and large countries may always grow faster than small countries. Long-run evidence is offered in support of the empirical relevance of these possibilities.
18,200 citations
Cites background from "External Economies of Scale and Com..."
...that it is possible to construct consistent, general equilibrium models with perfect competition , increasing returns, and externalities (see, e.g., Chipman 1970)....
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TL;DR: This article reviewed the empirical evidence for R&D spillovers and concluded that they are a major source of endogenous growth in various recent "New Growth Theory" models, and that they should be investigated further.
Abstract: R&D spillovers are, potentially, a major source of endogenous growth in various recent "New Growth Theory" models. This paper reviews the basic model of R&D spillovers and then focuses on the empirical evidence for their existence and magnitude. It reviews the older empirical literature with special attention to the econometric difficulties of actually coming up with convincing evidence on this topic. Taken individually,, many of the studies are flawed and subject to a variety of reservations, but the overall impression remains that R&D spillovers are both prevalent and important.
2,194 citations
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TL;DR: In this paper, the authors present a simple general equilibrium model of an economy where production and consumption occur in cities and analyze how factor rewards and cost of living vary with city size.
Abstract: This paper presents a simple general equilibrium model of an economy where production and consumption occur in cities. The paper focuses on the different sizes and types of cities generated by market forces and whether these market forces generate optimally size cities. Before the model is presented, four complex questions are naively answered, revealing the most basic concepts underlying the paper and intellectual debts to the existing literature. First the model of a single city is presented. How factor rewards and cost of living vary with city size is analysed. Given these results, the paper presents an analysis of market equilibrium and optimum city size. Finally, equilibrium in an economy with multiple types of cities is examined. At the end of the paper, we discuss how natural resources and transportation costs in trade can be integrated into the model. Throughout the paper, it is assumed that capital and labour are scarce resources and perfectly mobile within the economy. The economy is situated on a flat featureless plain, large enough so that land per se is never a scarce resource (although location will be a scarce resource). This non-critical assumption implies the opportunity cost of land is zero. Lastly, there are no specified transport costs of inter-city trade.(This abstract was borrowed from another version of this item.)
1,124 citations
705 citations
TL;DR: In this article, an agglomeration economy in the labor market is derived from a matching process between workers and firms, and it has the characteristics of a local public good. But the authors argue that since profit maximizing land developers cannot control the number of firms directly, they cannot attain efficient city sizes.
610 citations
Cites background from "External Economies of Scale and Com..."
...Most theoretical models of agglomeration are based on external scale economies [Chipman (1970)] and assume that the production function of a firm shifts out as city or industry size increases [Moomaw (1981)]....
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