Working Paper: CEPR ID: DP3854
Authors: Berthold Herrendorf; Arilton Teixeira
Abstract: We study a two?sector version of the neoclassical growth model with coalitions of factor suppliers in the capital producing sectors. We show that if the coalitions have monopoly rights, then they block the adoption of the efficient technology. We also show that blocking leads to a decrease in the productivity of each capital producing sector and to an increase in the relative price of capital; as a result capital stock and production fall in each sector. We finally show that the implied fall in the level of per capita income can be large quantitatively.
Keywords: Capital accumulation; Monopoly rights; Technology adoption; Total factor productivity; Vested interests
JEL Codes: E00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Monopoly rights (D42) | Technology adoption (O33) |
| Technology adoption (O33) | Productivity (O49) |
| Monopoly rights (D42) | Productivity (O49) |
| Productivity (O49) | Relative price of capital (D33) |