Monopolistic competition model: the influence of technological progress on equilibrium and social optimality

We consider a monopolistic competition model with endogenous choice of technology in the closed economy case. The aim is to make comparative statistics of equilibrium and social optimal solutions with respect to “technological innovation” parameter which influences on costs. Key findings: with the growth of innovation and investment in the production increase; behavior of the equilibrium variables depends only on the elasticity of demand; behavior of the socially optimal variables depends only on the elasticity of utility; behavior of the equilibrium and socially optimal variables does not depend on the properties of the cost as a function of R&D.