History and Coordination Failure
Tóm tắt
An extensive literature discusses the existence of a virtuous circle of expectations that might lead communities to Pareto-superior states among multiple potential equilibria. It is generally accepted that such multiplicity stems fundamentally from the presence of positive agglomeration externalities. We examine a two-sector model in this class and look for intertemporal perfect foresight equilibria. It turns out that under some plausible conditions, positive externalities must coexist with external diseconomies elsewhere in the model, for there to exist equilibria that break free of historical initial conditions. Our main distinguishing assumption is that the positive agglomeration externalities appear with a time lag (that can be made vanishingly small). Then, in the absence of external diseconomies elsewhere, the long-run behaviour of the economy resembles that predicted by myopic adjustment. This finding is independent of the degree of forward-looking behavior exhibited by the agents.
Tài liệu tham khảo
Arthur, B. (1984). “Competing Technologies and Lock-In by Historical Small Events: The Dynamics of Allocation Under Increasing Returns.” CEPR Publication, Stanford University.
Bryant, J. (1983). “A Simple Rational Expectations Keynes-Type Model.” Quarterly Journal of Economics 97, 525–528.
Chamley, C., and D. Gale. (1994). “Information Revelation and Strategic Delay in a Model of Investment.” Econometrica 62, 1065–1086.
Chatterjee, S., and R. Cooper. (1989). “Multiplicity of Equilibria and Fluctuations in Dynamic Perfectly Competitive Economies.” AEA Papers and Proceedings 79, 353–357.
Chatterjee, S., R. Cooper, and B. Ravikumar. (1990). “Participation Dynamics: Sunspots and Cycles,” NBER Working Paper Series 3438.
Cooper, R., and A. John. (1988). “Coordinating Coordination Failures in a Keynesian Model.” Quarterly Journal of Economics 103, 441–464.
David, P. (1985). “Clio and the Economics of QWERTY.” American Economic Review, Papers and Proceedings 75, 332–337.
Diamond, P. (1982). “Aggregate Demand Management in Search Equilibrium.” Journal of Political Economy 90, 881–894.
Farrell, J., and G. Saloner. (1985). “Standardization, Compatibility and Innovation.” Rand Journal of Economics 16, 70–83.
Fukao, K., and R. Benabou. (1993). “History Versus Expectations: A Comment.” Quarterly Journal of Economics 108, 535–542.
Gale, D. (1995). “Dynamic Coordination Games.” Economic Theory 5, 1–18.
Henderson, J. V. (1994). “Externalities and Industrial Development.” NBER Working Paper 4730.
Hirschman, A. (1958). The Strategy of Economic Development. New Haven: Yale University Press.
Katz, M. L., and C. Shapiro. (1986). “Technology Adoption in the Presence of Network Externalities.” Journal of Political Economy 94, 822–841.
Katz, M. L., and C. Shapiro. (1992). “Product Introduction with Network Externalities.” Journal of Industrial Economics 40, 55–83.
Kemp, M. C., and H. Y. Wan. (1974). “Hysteresis of Long-Run Equilibrium from Realistic Adjustment Costs.” In George Horwich and Paul A. Samuelson (eds.), Trade, Stability and Macroeconomics. New York: Academic Press.
Krugman, P. (1991a). “History Versus Expectations.” Quarterly Journal of Economics 106, 651–667.
Krugman, P. (1991b). “Increasing Returns and Economic Geography.” Journal of Political Economy 99, 483–499.
Matsuyama, K. (1991). “Increasing Returns, Industrialization, and Indeterminacy of Equilibrium.” Quarterly Journal of Economics 106, 616–650.
Murphy, K., A. Shleifer, and R. Vishny. (1989). “Industrialization and the Big Push.” Journal of Political Economy 97, 1003–1026.
Mussa, M. (1978). “Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model.” Journal of Political Economy 68, 775–791.
Myrdal, G. (1957). Economic Theory and Underdeveloped Regions. London: Duckworth.
Rosenstein-Rodan, P. (1943). “Problems of Industrialization of Eastern and Southern Europe.” Economic Journal 55, 202–211.
Scitovsky, T. (1954). “Two Concepts of External Economies.” Journal of Political Economy 62, 143–151.
Shleifer, A. (1986). “Implementation Cycles.” Journal of Political Economy 94, 1163–1190.