<p>In the classic RBC model you don't need intermediate good producers. They are introduced, for instance, in the New Keynesian model so that firms have some amount of monopoly power and don't always have to price their goods at the marginal cost of production.</p>

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2020-07-03T21:09:04.233Z
2020-07-03T21:09:04.233Z
user_lambda
<p>I am learning the RBC model and find some papers that use the intermediate good producers under the monopolistic competitive market. Could you tell me the benefit of this method? Thanks.</p>

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2020-07-03T10:04:02.580Z
This question belongs on Economics Stack Exchange.
Richard Hardy
<macroeconomics>
Why we introduce the intermediate good producers into RBC model?
Claudia_ECON
# Why we introduce the intermediate good producers into RBC model?

(Asked by: username_0 on 2020-07-02)

I am learning the RBC model and find some papers that use the intermediate good producers under the monopolistic competitive market. Could you tell me the benefit of this method? Thanks.

**Tags:** macroeconomics
> **Comments:**
> **username_1**: This question belongs on Economics Stack Exchange.  

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## 1 answers

### Answer by username_2 on 2020-07-03. Score: 2 | Accepted answer

In the classic RBC model you don't need intermediate good producers. They are introduced, for instance, in the New Keynesian model so that firms have some amount of monopoly power and don't always have to price their goods at the marginal cost of production.


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