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3. What are the channels through which a market economy can be modeled in the context of a developing country? Answer: Introduce imperfect competition through
3. What are the channels through which a market economy can be modeled in the context of a developing country?
Answer: Introduce imperfect competition through two channels : increasing returns to scale, and complementarities and coordination failure. Here provide the definitions of each of these concepts and discuss the models that uses these concepts ( The Big Push model and the O-ring model).
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