We develop a two-sector model of monopolistic competition with a dierentiated intermediate good and variable elasticity of technological substitution. This setting proves to be well-suited to studying the nature and origins of external increasing returns. We disentangle two sources of scale economies: specialization and competition. The former depends only on how TFP varies with input diversity, while the latter is fully captured by the behavior of the elasticity of substitution across inputs. This distinction gives rise to a full characterization of the rich array of competition regimes in our model. The necessary and sucient conditions for each regime to occur are expressed in terms of the relationships between TFP and the elasticity of substitution as functions of the input diversity. Moreover, we demonstrate that, despite the folk wisdom resting on CES models, specialization economies are in general neither necessary nor sucient for external increasing returns to emerge. This highlights the profound and non-trivial role of market competition in generating agglomeration economies, endogenous growth, and other phenomena driven by scale economies.

中文翻译：

---

专业化与竞争：规模报酬递增的剖析

我们开发了具有差异化中间产品和可变技术替代弹性的垄断竞争的两部门模型。事实证明，这种设置非常适合研究外部递增收益的性质和起源。我们解开规模经济的两个来源：专业化和竞争。前者仅取决于 TFP 如何随投入多样性而变化，而后者完全被跨投入的替代弹性行为所捕获。这种区别导致了我们模型中丰富的竞争制度的完整特征。每种制度发生的必要和充分条件用 TFP 和作为输入多样性函数的替代弹性之间的关系表示。此外，我们证明，尽管民间智慧基于 CES 模型，但一般而言，专业化经济对于外部递增收益的出现既不必要也不充分。这凸显了市场竞争在产生集聚经济、内生增长和其他由规模经济驱动的现象方面的深刻而重要的作用。