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Does the market deliver the right technology?

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  • Toulemonde, Eric

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.

Suggested Citation

  • Toulemonde, Eric, 2017. "Does the market deliver the right technology?," Economics Letters, Elsevier, vol. 150(C), pages 95-98.
    • Handle: RePEc:eee:ecolet:v:150:y:2017:i:c:p:95-98
    DOI: 10.1016/j.econlet.2016.11.013
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    References listed on IDEAS

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    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 217-235.
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    4. Bykadorov, Igor & Gorn, Alexey & Kokovin, Sergey & Zhelobodko, Evgeny, 2015. "Why are losses from trade unlikely?," Economics Letters, Elsevier, vol. 129(C), pages 35-38.
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    More about this item

    Keywords

    Welfare; Monopolistic competition; Productivity; Technology;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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