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|Title: ||The evolution of markets and the revolution of industry : a quantitative model of England’s development, 1300-2000|
|Author(s): ||Desmet, Klaus [desmet]|
Parente, Stephen L.
|Issued date: ||Apr-2009|
|Abstract: ||This paper argues that an economy's transition from Malthusian stagnation to modern growth requires markets to reach a critical size, and competition to reach a critical level of intensity. By allowing an economy to produce a greater variety of goods, a larger market makes goods more substitutable, raising the price elasticity of demand, and lowering mark-ups. Firms must then become larger to break even, which facilitates amortizing the fixed costs of innovation. We demonstrate our theory in a dynamic general equilibrium model calibrated to England's long-run development and explore how various factors affect the timing of takeoff.|
|Sponsor: ||European Community's Seventh Framework Program|
|Keywords: ||Unified growth theory|
|JEL Classification: ||O14|
|Appears in Collections:||OpenAIRE: Open Access Infrastructure for Research in Europe|
DE - Otros documentos
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