A closed economy setting in the Big Push model simplifies the assumptions by focusing solely on internal factors like national income without international trade effects. In this setting, all consumption derives from national production, and there are no savings, which means national income is fully spent on goods produced within the economy . This leads to outcomes where any change in production methods directly affects national income and consumption patterns. Closed economies emphasize the role of collective domestic demand dynamics and wages in achieving equilibrium at point B, where industrialization is sustainable . This also highlights the need for coordination since there are no external markets to absorb surpluses or deficits.

Prevailing prices and wages are critical determinants of market-driven industrialization in the Big Push model. A lower modern sector wage (below point A) makes industrialization directly profitable because it reduces costs relative to revenue, encouraging modern firms to enter the market . Conversely, a higher wage (above point B) would make it unfeasible for modern firms to sustain operations, leading to continued reliance on traditional production methods . Price stability (at price level 1) maintains competitive pressure, ensuring that traditional methods cannot re-enter the market once modern methods have been adopted . Thus, the interaction between wage levels and prices dictates whether the market can autonomously transition to an industrialized state.

A coordination failure can occur because the decision to adopt modern technology depends not just on individual profitability but also on the actions of other firms. Even with available technology, if the prevailing market conditions result in a wage bill line that passes between critical points (A and B), firms individually may not find it profitable to switch to modern methods due to insufficient collective demand . This creates a situation where, even though industrialization would benefit all through higher output and income (point B equilibrium), the market fails to achieve it autonomously due to lack of coordination among different market players. External intervention by policy can be necessary to resolve this failure .

The decision for a modern firm to enter the market in a traditional economy is influenced by efficiency and wage considerations. Specifically, the firm evaluates how much more efficient it is compared to traditional methods and the level of wages it must pay. If the modern firm faces low fixed costs or marginal labor requirements, or if it pays a relatively low wage, it is more likely to find entry profitable . Additionally, if a wage bill line like W1 passes below point A, revenues exceed costs, encouraging the modern firm to enter the market . The coordination among firms and external factors like technology and prevailing prices also play roles .

Technological efficiency in the Big Push model is vital for determining the likelihood of transitioning from a traditional to a modern economy. The model assumes increasing returns to scale in the modern sector, allowing a more efficient (steeper slope in the production line) production process compared to the linear method of the traditional sector . A higher efficiency suggests a steeper production function for the modern sector, making it more likely that the wage bill line will fall below the necessary thresholds for profitable entry, thus supporting industrialization . Therefore, technological efficiency is directly linked to the ability of modern firms to lower costs and compete with traditional practices, fostering economic development.

Multiple equilibria arise in the Big Push model due to the interplay between wage levels and production efficiency. Specifically, conditions such as a wage bill line passing between key points A and B create situations where both an industrialized and a non-industrialized equilibrium can exist . In one scenario, modern firms enter all markets if the overall incentives make it profitable (point B), while in the other, they stay away if initial conditions deter profitability (point A). These scenarios are reliant on the size of fixed costs, wage levels, and whether there are sufficient incentives for technological adoption across different sectors . The market's inability to transition from point A to B on its own due to coordination issues can also lead to these dual equilibria.

In the Big Push model, the position of the wage bill line is crucial in determining the industrialization process. If the wage bill line passes below point A, it indicates that revenues exceed costs, thus prompting the market to lead the economy towards modernization . However, if it passes above point B, even an attempt by modern producers across all sectors will result in losses, preventing industrialization. A wage line between points A and B indicates a situation where industrialization is beneficial but requires external coordination since the market alone won't move from point A to B due to a coordination failure .

The assumption of no saving in the Big Push model means that all national income is immediately spent on consumption, which affects economic dynamics by directly linking production levels to consumption demands . This leads to an environment where changes in output or production efficiency have immediate effects on national income distribution and spending patterns. This also implies that any profits made by modern firms return to the economy through wages and consumption rather than being saved or invested, causing a constant flow within the economy and reinforcing the importance of internal demand for sustaining industrialization . It limits the economy's ability to accumulate capital for further investment independently, underscoring the role of coordinated market expansions.

Policy interventions aimed at addressing coordination failures in the Big Push model can include subsidizing entry costs for modern firms, ensuring wage policies that increase profitability for these firms, and providing infrastructure and training to reduce transition barriers . Governments may implement strategic investments in areas where technological advances are necessary to stimulate initial growth. Additionally, policy measures could ensure collective demand by coordinating sectoral development to move the economy from a low-wage equilibrium at point A to a high-output equilibrium at point B, where the economy benefits from modern industrialization . Effective measures should focus on overcoming market inertia and enabling a coordinated shift across sectors.

Urbanization can serve as a catalyst for requiring a Big Push in economic development by concentrating labor, resources, and markets, which magnify both the benefits and challenges of transitioning to modern industrial production. As populations move to urban centers, infrastructure demands increase and provide opportunities for economies of scale . This concentration facilitates efficient communication and coordination among firms, which are necessary for overcoming coordination failures inherent in transitioning from traditional to modern production methods. Additionally, urbanization can lead to increased demand for diversified goods and services, creating a larger domestic market capable of absorbing the increased outputs from modernized production processes . Thus, urbanization amplifies the potential impact of a Big Push, making it a vital consideration in planning for economic transformation.