Abstract

We show that the market does not systematically deliver the right technology under monopolistic competition. (i) Firms might rush on large-scale technology, pushing to the exit many desirable varieties produced by small firms. (ii) Firms might shun large-scale technology, though that technology would benefit the society through lower prices. (iii) A bias towards small-scale technology in some stage of development, and a bias towards large-scale technology in another stage is also a possibility.

Original languageEnglish
Pages (from-to)95-98
Number of pages4
JournalEconomics Letters
Volume150
DOIs
Publication statusPublished - 1 Jan 2017

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Keywords

  • Monopolistic competition
  • Productivity
  • Technology
  • Welfare

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