Taste for variety: Model of Grossman and Helpman.
Taste for variety: Model of Grossman and Helpman.
Taste for variety: Model of Grossman and Helpman.
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Variety expansionThe <strong>Model</strong>Output <strong>of</strong> intermediaries◮ With prices given by two last equations, the aggregate output<strong>of</strong> middle products is:X i =∑jn ip −ɛX in j p 1−ɛ β ∑X j jp Yj Y j (16)◮ Being the function <strong>of</strong>:◮ Number <strong>of</strong> producers in the country, n i ;◮ Price <strong>of</strong> the <strong>variety</strong> (identical across varieties), p Xi ;◮ Total output <strong>of</strong> final product in both countries.
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