Monopolistic competition and income dispersion
CORE Discussion Paper. CORE DP-2013. Université catholique de Louvain , 2013. No. 2013/71.
Osharin A., Thisse J., Ushchev P., Verbus V. A.
We develop a model of monopolistic competition that accounts for consumers' heterogeneity in both incomes and preferences. This model makes it possible to study the implications of income redistribution on the toughness of competition. We show how the market outcome depends on the joint distribution of consumers' tastes and incomes and obtain a closed-form solution for a symmetric equilibrium. Income redistribution generically affects the market outcome, even when incomes are redistributed across consumers with different tastes in a way such that the overall income distribution remains the same.
Research target: Economics and Management
Priority areas: economics
, Аудит и финансовый анализ 2013 № 6 С. 154-160
The paper develops a one-sector model of monopolistic competition with heterogeneous consumers, which preferences depend upon their personal income. The model is used for the analysis of the mark-ups dependence on the inequality of consumers’ income distribution and average wage. The paper shows that mark-ups can ambiguously depend upon income inequality at fixed average income, ...
Added: November 14, 2013
Распределение предпринимательских способностей и миграция: структура занятости, неравенство доходов и благосостояние
, , Журнал Новой экономической ассоциации 2015 № 2 С. 36-62
We define a general equilibrium model with heterogeneous individuals who are endowed by identical preferences, given by utility function with constant elasticity of substitution (CES), and by heterogeneous entrepreneurial skills. We find that scale effects linked to migration are tractable in the framework of the constructed model because the migration changes the market size together ...
Added: November 13, 2014
, , et al., Journal of Economic Structures 2020 Vol. 9 P. 1-12
The paper develops a two-country monopolistic competition model of trade featuring country-specifc consumer tastes. The accounting for heterogeneity in tastes is achieved by assuming diferent elasticities of substitution in the CES utility function for diferent country consumers. The proposed framework extends the canonical Krugman’s approach by revealing new efects regarding markups response to consumer heterogeneity ...
Added: October 10, 2020
, Advances in Economics and Business 2013 Vol. 1 No. 2 P. 145-149
The paper investigates distributional effects and market structure in a one-sector model of monopolistic competition with heterogeneous consumers. By using the CES utility function depending on consumer’s personal income the paper shows how the equilibrium prices, firm size and number of firms depend upon income distribution and intensity of competition. The proposed model extends the ...
Added: November 13, 2013
, , Экономическая политика 2019 Т. 14 № 3 С. 152-175
The paper builds a two-sector monopolistic competition model featuring multi-product firms and heterogeneous consumers endowed with a Cobb–Douglas utility nesting a generalized CES function. In contrast to the standard CES, the generalized CES function includes both the love of variety and the love for product quality, which makes it possible to distinguish consumers differing in their ...
Added: October 24, 2019
, , Heterogeneous consumers and market structure in a monopolistically competitive setting / EERC. Series "Labor markets and social policy". 2015. No. 15/03E.
The present paper extends the traditional Dixit and Stiglitz set-up by introducing consumers’ workers’ heterogeneity into a general equilibrium model of monopolistic competition. The model obtains a closed-form solution for a symmetric equilibrium and shows how the market outcome depends on the joint distribution of consumers’/workers’ taste and labor productivities. In contrast to the traditional ...
Added: March 8, 2016
, M. : Litterra, 2018
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Added: October 21, 2014
, Общественные науки и современность 2021 № 1 С. 63-72
Patterns for competitive and monopoly behaviour, market power configurations and instruments of interfirm relationships are under radical transformation in a digital era. There arise new forms of monopolistic strategies that aim at establishing, strengthening and withstanding long-term market power in various industries. Analysis of Russian and foreign economic investigations that was done in the article ...
Added: March 20, 2021
, , RAND Journal of Economics 2012 Vol. 43 No. 2 P. 329-347
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 ...
Added: November 11, 2012
, , HSE Economic Journal 2015 Vol. 19 No. 3 P. 386-394
We consider standard monopolistic competition models in the spirit of Dixit and Stiglitz or Melitz with aggregate consumer's preferences defined by two well known classes of utility functions – the implicitly defined Kimball utility function and the variable elasticity of substitution utility function. These two classes gene ralize classical constant elasticity of substitution utility function and overcome its lack of ...
Added: October 18, 2015
, , , Журнал Новой экономической ассоциации 2013 № 19 С. 10-26
The paper studies a market of horizontally differentiated good under increasing return to scale and exogenous number of firms. Three concepts of equilibria are compared: Cournot, Bertrand and monopolistic competition. Under fairly general assumptions on consumer’s preferences, it is shown that Lerner index is the highest in Cournot case, monopolistic competition provides the lowest one ...
Added: November 14, 2013
, , Advances in Systems Science and Applications 2020 Vol. 20 No. 2 P. 119-130
We present a natural generalization of the Dixit-Stiglitz monopolistic competition model (DSM) — we assume that there is a continuum of industries, each of them described as in DSM, and each characterized with its own elasticity of substitution. Although firms in all industries share the same level of productivity and costs, exogenous technological progress leads ...
Added: December 8, 2020
, , Heterogeneous consumers and market structure in a monopolistically competitive setting / Economics Education and Research Consortium. Series "EERC Working Paper Series". 2015. No. 15/E03.
The present paper extends the traditional Dixit and Stiglitz set-up by introducing consumers’/workers’ heterogeneity into a general equilibrium model of monopolistic competition. The model obtains a closed-form solution for a symmetric equilibrium and shows how the market outcome depends on the joint distribution of consumers’/workers’ taste and labor productivities. In contrast to the traditional framework, ...
Added: October 18, 2015
, , Вестник НГУЭУ 2014 № 1 С. 326-337
In 2000s, Russian large retailers captured a large share of the market and obtained a significant market power. This change in the market organization may enhance or deteriorate social welfare. Public interest in this issue stimulated adoption by the Russian Parliament (State Duma) of the law against the concentration of trade in the hands of ...
Added: October 18, 2014
, , et al., Экономический журнал Высшей школы экономики 2015 Т. 19 № 2 С. 218-248
This paper studies how heterogeneous individuals, that differ by entrepreneurial skills and productivity as a worker, endogenously choose their occupation (workers vs. entrepreneurs) based on expected income comparison (wages vs. profits). Each entrepreneur runs a firm that produces a single variety of a horizontally differentiated good under monopolistic competition. We show that the cutoff for occupational selection between workers ...
Added: June 16, 2015
, , The Scandinavian Journal of Economics 2019 Vol. 121 No. 3 P. 1244-1269
Standard measures of competitive toughness fail to capture the fact that, as consumers optimize intertemporally, firms operating today compete with (yet non-existent) businesses which will be started tomorrow. We develop a two-tier CES model of dynamic monopolistic competition in which the impact of product differentiation on the market outcome depends crucially on the elasticity of ...
Added: January 9, 2018
, , Пространственная экономика 2014 № 3 С. 12-25
The article deals with the theory of monopolistic competition under demand uncertainty. The authors consider the economy with labor immobility consisting of the high-tech sector with monopolistic competition and the standard sector with perfect competition. Preferences between sectors are specified by the Cobb – Douglas production function. It is assumed that companies make output decisions under ...
Added: January 16, 2015
, , , Trade Patterns and Export Pricing Under Non-CES Preferences / . 2013. No. 124.
We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firm profit and firm size may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manufactured good, while both firms' size ...
Added: November 19, 2013
, , , Journal of International Economics 2014 No. 94 P. 129-142
We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of sub- stitution. Firms' prots and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manu- factured good, although both rm ...
Added: June 19, 2014
, , Heterogeneous Consumers and Trade Patterns in a Monopolistically Competitive Setting / Высшая школа экономики. Series WP BRP "Economics/EC". 2016. No. WP BRP 131/EC/2016 .
The paper considers a two-country trade model of monopolistic competition featuring the heterogeneity of consumer preferences both within and across countries. The incorporation of heterogeneity into a traditional monopolistic competition setting is achieved by assuming different elasticities of substitution in the CES utility function for different consumers. The proposed setup expands on the traditional model ...
Added: April 1, 2016
, , et al., Economics Letters 2014 Vol. 122 No. 2 P. 348-352
We develop a model of monopolistic competition that accounts for consumers' heterogeneity in both incomes and preferences. This model makes it possible to study the implications of income redistribution on the toughness of competition. We show how the market outcome depends on the joint distribution of consumers' tastes and incomes and obtain a closed-form solution ...
Added: November 18, 2013
Модель монополистической конкуренции: влияние технологического прогресса на равновесие и общественную оптимальность
, , Математическая теория игр и ее приложения 2014 Т. 6 № 2 С. 3-31
We consider a monopolistic competition model with endogenous choice of technology in the closed economy case. The aim is to make comparative statistics of equilibrium and social optimal solutions with respect to "technological innovation"; parameter which influences on costs. Key findings: with the growth of innovation and investment in the production increase; behavior of the ...
Added: October 18, 2014
, Product Diversity in a Vertical Distribution Channel under Monopolistic Competition / Economics Education and Research Consortium. Series "EERC Working Paper Series". 2010. No. 10/03E.
In Russia the chain-stores gained a considerable market power. In the paper we combine a Dixit-Stiglitz industry with a monopolistic retailer. The questions addressed are: Does the retailer always deteriorate welfare, prices and variety of goods? Which market structure is worse: Nash or Stackelberg behavior? What should be the public policy in this area? ...
Added: November 17, 2013
, , On The Social Efficiency In Monopolistic Competition Models / Высшая школа экономики. Series WP BRP "Economics/EC". 2014. No. WP BRP 80/EC/2014 .
We consider standard monopolistic competition models with aggregate consumer's preferences defined by two well-known classes of utility functions | the Kimball utility function and the variable elasticity of substitution utility function. It is known that market equilibrium is efficient only for the special case when utility function has a constant elasticity of substitution, but ...
Added: December 4, 2014