Munich Personal RePEc Archive

Special Economic Zones and Agriculture with Increasing Returns

Mukherjee, Soumyatanu (2011): Special Economic Zones and Agriculture with Increasing Returns.


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This paper has made an attempt to show that in a developing economy, agriculture and Special Economic Zones (SEZ) can go simultaneously without affecting one another if appropriate subsidy policy is designed by the government. We have considered increasing returns brought about by external economies of scale in the SEZ-led industrial sector with the help of Dixit-Stiglitz (1977) type of production function where resource used to produce each variety of the SEZ-good is itself produced using constant returns to scale (CRS) technology and CRS is also present in the agricultural sector.

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