タイトル：Competition, Productivity Growth and Structural Change
Extending the endogenous growth model proposed by Young (1998), we construct a two-sector growth model that explains the observed pattern of structural change. Unlike existing studies, we assume neither non-homothetic preferences nor exogenous differential in productivity growth among different sectors. Our key assumption is that any two goods produced by firms in a sector are closer substitute than those produced by firms in the other sector, which gives rise to an endogenous differential in productivity growth among different sectors. When the two composite goods are poor substitute, the share of employment gradually shifts from progressive to stagnant sectors. In contrast to the previous studies of structural change that consider competitive economies without market failure, we study the socially optimal allocation and characterize the optimal tax policies.