Конкуренция между маленькими магазинами и большим торговым центром
We study competition between two shopping places: a shopping street, which accommodates many independent small shops, and a large shopping center. The approach we propose in this paper combines the features of spatial competition models and monopolistic competition models. Consumers can shop at any of the shopping places (or at both), as well as choose how much of each variety to purchase. We find that the equilibrium is shaped by interaction of two opposite effects: the market expansion effect (which arises because a shopping center becomes more appealing for consumers when its size increases) and the standard competition effect. Firms’ profits increase (decrease) in response to entry of new competitors to the shopping street if and only if the former (latter) effect is a dominant one. We also show that the shopping street cannot be arbitrarily small under free entry and exit of shops and under a given size of the shopping center. However, the shopping street can abruptly vanish when the shopping center gets sufficiently large.
Many industries are made of a few big firms, which are able to manipulate the market outcome, and of a host of small businesses, each of which has a negligible impact on the market. We provide a general equilibrium framework that encapsulates both market structures. Due to the higher toughness of competition, the entry of big firms leads them to sell more through a market expansion effect generated by the shrinking of the monopolistically competitive fringe. Furthermore, social welfare increases with the number of big firms because the pro-competitive effect associated with entry dominates the resulting decrease in product diversity.
We propose a model of monopolistic competition with additive preferences and variable marginal costs. Using the concept of "relative love for variety," we provide a full characterization of the free-entry equilibrium. When the relative love for variety increases with individual consumption, the market generates pro-competitive effects. When it decreases, the market mimics anti-competitive behavior. The constant elasticity of substitution is the only case in which all competitive effects are washed out. We also show that our results hold true when the economy involves several sectors, firms are heterogeneous, and preferences are given by the quadratic utility and the translog.