Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83906
Authors: 
Brito, Paulo
Dixon, Huw
Year of Publication: 
2007
Series/Report no.: 
Cardiff Economics Working Papers E2007/16
Abstract: 
In this paper we consider the entry and exit of Örms in a dynamic general equilibrium model with capital. At the Örm level, there is a Öxed cost combined with increasing marginal cost, which gives a standard U-shaped cost curve with optimal Örm size. Entry is determined by a free entry condition such that the costs of entry are equal to the present value of incumbent Örms, the cost of entry (exit) depends on the áow of entry (exit). Then equilibrium is saddlepoint stable and the stable manifold is two-dimensional. Transitional dynamics can, under certain circumstances, be non-monotonic.
Subjects: 
Entry, dynamics, Ramsey
JEL: 
D92
C62
E32
O41
Document Type: 
Working Paper

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