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Capital Accumulation, Mergers, and the Ramsey Golden Rule

2007; Linguagem: Inglês

10.1007/978-0-8176-4553-3_24

2474-0187

Roberto Cellini, Luca Lambertini,

Complex Systems and Time Series Analysis

We take a differential game approach to model the Ramsey growth model from the standpoint of the representative firm. We identify parametric conditions such that the economy cannot reach the Ramsey golden rule, due to the presence of a stable demand-driven equilibrium. This may happen under Cournot and Bertrand behaviour, as well as social planning. We show that a wave of horizontal mergers can indeed drive the economy towards the Ramsey golden rule.