Gersbach, Hans; Schneider, Maik T.; Schneller, Olivier - 2008 - This version: January 2008
Lxc(i) =
‡α
w
· 1
1−α A(i), (4)
where w denotes the wage level.
The monopolistic intermediate firm asks a price pm(i) = wα … profits if it innovates success-
fully or if it does not innovate and there is no entry. The maximization problem
leads to the … in
the intermediate-good markets yield prices pm(i) = wα in the monopolistic sectors and
pc(i) = w in the competitive …