The Evolution of Markets and the Revolution of Industry: A Unified Theory of Growth

This paper puts forth a uni\u85ed theory of growth that captures a number of relevant features of countries transitions from stagnant, predominantly rural economies to vibrant, industrial-ized economies that have been overlooked by the literature. In our theory, increasing variety of consumer goods and increasing \u85rm size, which are the consequence of a gradual expansion in the market, sow the seeds for process innovation and an economys take-o¤. We demonstrate this mechanism in a dynamic general equilibrium model calibrated to Englands long-run devel-opment, and explore how various factors a¤ected the timing of its take-o¤