Industrial Organization and Structural Change in Developing Economies : A Theoretical Examination

This paper theoretically examines the relationship between the industrial organization of firms and structural change in a developing economy. For this, we built a multisectoral model with different balances in the competition and evaluated the changes in the productive structure. Specifically, we consider an informal sector under monopolistic competition and a modern sector under oligopoly. Theoretical results show that the informal sector of a developing economy disappears when concentration increases and competition equalizes around an oligopoly structure. Therefore, we conclude that there is a relationship between industrial concentration and economic development