Utilize este identificador para referenciar este registo: http://hdl.handle.net/10400.5/6318
Título: Coordination and development
Autor: Pontes, José Pedro
Pais, Joana
Palavras-chave: Big Push
Coordination games
Economic development
Equilibrium selection
Industrialization
Data: 2013
Editora: ISEG. Departamento de Economia
Citação: Pontes, José Pedro, Joana Pais. 2013. "Coordination and Development". Instituto Superior de Economia e Gestão. ISEG/DE working papers. Nº 29/2013/DE/UECE
Relatório da Série N.º: ISEG/DE working papers;nº 29/2013/DE/UECE
Resumo: This paper addresses the issue of industrial development using a coordination game. Complementarities between transport infrastructure provision by the Government and consumer goods manufacturing firms, and among consumer goods firms themselves dictate the outcome: either the transport infrastructure (i.e., a highway) is not built and firms keep doing “home” production, thus supplying mainly nearby consumers and dispensing with a highway; or they switch to “factory” production, a more spatially centralized regime, where output must be sold over long distances, thus implying the construction of a highway. In relation to the existent literature, this paper presents two main innovations. Firstly, the two sources of linkage, namely cost linkage, through the provision of an indivisible input (the highway), and demand linkage, through the wage rise brought about by industrialization, are not treated separately, but they are integrated in the same model. Consequently, the game has now two levels of equilibrium selection. Secondly, the paper does not limit itself to checking that there can arise multiple Nash equilibria under certain circumstances, but it discusses methods for the selection of a unique outcome. Consequently, in addition to the classical Nash equilibria mentioned above, there is a third possible solution where the Government builds the highway but the consumer goods firms refrain from using it and stick to “home” production. Hence, the transport infrastructure becomes a “white elephant”.
URI: http://hdl.handle.net/10400.5/6318
ISSN: 0874-4548
Versão do Editor: https://aquila1.iseg.ulisboa.pt/aquila/getFile.do?method=getFile&fileId=418507&contentContextPath_PATH=/departamentos/ec/lateral/menu-working-papers/nova-serie/2013&_request_checksum_=b55048659c4d9d20672fedd21955c1ce0b75c04a
Aparece nas colecções:DE - Documentos de trabalho / Working Papers
UECE - Documentos de Trabalho / UECE - Working Papers

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