Рг =
Y.
βw*
(16)
Relative prices must then be:
(17)
Free entry drives profit to zero, and the optimal output level is the same for each firm in any
region:
*
x*
α (σ -1)
β
(18)
the associated equilibrium labour input is also constant and given by:
l* = α + βxi = α + α (σ -1) = ασ
(19)
Full employment of the labour force allow us to determine the number of manufacturing
varieties in equilibrium13:
ni = Li
i у*
li
Li
ασ
(20)
13 Since each variety is produced in one location by a single firm, ni represents both the number of varieties and
the number of firms in region i.
17
More intriguing information
1. Estimating the Impact of Medication on Diabetics' Diet and Lifestyle Choices2. A Dynamic Model of Conflict and Cooperation
3. Real Exchange Rate Misalignment: Prelude to Crisis?
4. The name is absent
5. Announcement effects of convertible bond loans versus warrant-bond loans: An empirical analysis for the Dutch market
6. Howard Gardner : the myth of Multiple Intelligences
7. Qualification-Mismatch and Long-Term Unemployment in a Growth-Matching Model
8. The name is absent
9. The name is absent
10. The name is absent