Most models of aggregate growth, even those with spillovers or external effects, rely
on price-taking behavior. But once these three premises are granted, it follows directly
that an equilibrium with price-taking cannot be supported. Section 2 of the paper starts by
showing why this is so. It also indicates which of the the premises is dropped in growth
models that do depend on price-taking behavior. The argument in this section is
fundamental to the motivation for the particular model of monopolistic competition that
follows, but is more general than the model itself.