Emergence of New Industries and Endogenous Growth Cycles.

Abstract

This paper constructs a growth model in which monopolistically competing firms choose the characteristic of their own product from an unbounded product space. While consumers wish to satisfy various needs by purchasing a diverse range of goods, production costs are lower for those goods that are more similar to existing ones because of spillover effects in the lesrning-by-doing process.GROWTH MODELS ; MONOPOLIES ; COMPETITION ; COSTS