The Dixit–Stiglitz economy with a ‘small group’ of firms: A simple and robust equilibrium markup formula

d’Aspremont, Claude; Ferreira, Rodolphe Dos Santos

doi:10.1016/j.rie.2017.10.007

Cited by 11 publications

(6 citation statements)

References 15 publications

(18 reference statements)

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“…The earliest treatment we are aware of is in a work of Pascoa (1997), mainly focused on an example with Stone–Geary preferences and a continuum of goods. More recently, D’Aspremont and Dos Santos Ferreira (2016, 2017) have provided a related analysis of asymmetric preferences with an outside good adopting an alternative equilibrium concept (but their monopolistic competition limit is consistent with ours). The trade literature with heterogeneous firms, started by Melitz (2003) and Melitz and Ottaviano (2008), has usually considered monopolistic competition with symmetric preferences; only a few works have added asymmetries to model quality differentials among goods (for instance Baldwin & Harrigan, 2011; Crozet et al., 2012; Feenstra & Romalis, 2014), but retaining a CES structure.…”

Section: Introductionsupporting

confidence: 72%

Monopolistic competition, as you like it

Bertoletti

Etro

2021

Economic Inquiry

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We explore monopolistic competition with asymmetric preferences over a variety of goods provided by heterogeneous firms, and compute equilibria (approximating Cournot and Bertrand equilibria when market shares are negligible) through average Morishima elasticities of substitution. Further results concerning pricing and entry emerge under homotheticity and when demands depend on a common aggregator, as with Generalized Additively Separable preferences. Under additivity we can determine which goods are going to be provided under free entry, as well as the selection effects associated with changes in market size, consumers' income, aggregate productivity, and preference parameters.

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Section: Introductionsupporting

confidence: 72%

Monopolistic competition, as you like it

Bertoletti

Etro

2021

Economic Inquiry

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“…China's resource and environmental markets have been categorized as a typical monopolistic competition market structure [31][32][33]. The Dixit-Stiglitz (D-S) monopolistic competition framework is commonly used as an analytical framework for analyzing issues related to the monopolistic competition market structure [34,35]. Therefore, under the framework of a new economic geography, this study adopted Cobb-Douglas (C-D) technology to construct a theoretical model according to the monopolistic competition in the D-S model.…”

Section: Theoretical Modelmentioning

confidence: 99%

The Impact of Water and Soil Scarcity and Pollution on Industrial Agglomeration: Evidence from China

Zhu

Wang

et al. 2021

Sustainability

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Water and soil scarcity and pollution have become more severe problems in China in recent years. On one hand, rapid economic growth has led to increasing environmental problems. On the other hand, the environmental problems resulting from human economic activities can impose new constraints on industrial agglomeration, making economic development unsustainable. In the present study, an individual fixed-effect model was constructed based on the framework of the new economic geography and the provincial-level data of China. The model estimated its parameters with OLS in order to analyze how the mechanisms of industrial agglomeration are affected by resource security and environmental factors. In addition, this study also used Hausman statistical tests and Fisher–PP unit root tests to analyze the endogenous problems and robustness of the model, respectively. The results showed that water and soil scarcity and environmental pollution have negative effects on industrial agglomeration. The negative effects were observed to significantly increase with levels of local government competition, but did not vary with the regional market segmentation.

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“…In other words, firms producing differentiated goods are no longer considered insignificant in relation to the sector's size. Under very general assumptions about demand, an oligopolistic equilibrium can be obtained characterized by profit markups on the marginal cost whose expression remains simple and covers as a limit case the usual markup prevailing in monopolistic competition (d' Aspremont and Dos Santos Ferreira, 2017).…”

Section: Firms and Marketsmentioning

confidence: 99%

The Winter of our Discontent

Ferreira¹

2019

Revue De l'OFCE

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Distribution électronique Cairn.info pour OFCE. © OFCE. Tous droits réservés pour tous pays.La reproduction ou représentation de cet article, notamment par photocopie, n'est autorisée que dans les limites des conditions générales d'utilisation du site ou, le cas échéant, des conditions générales de la licence souscrite par votre établissement. Toute autre reproduction ou représentation, en tout ou partie, sous quelque forme et de quelque manière que ce soit, est interdite sauf accord préalable et écrit de l'éditeur, en dehors des cas prévus par la législation en vigueur en France. Il est précisé que son stockage dans une base de données est également interdit. Powered by TCPDF (www.tcpdf.org) © OFCE | Téléchargé le 05/08/2020 sur www.cairn.info (IP: 44.224.250.200) © OFCE | Téléchargé le 05/08/2020 sur www.cairn.info (IP: 44.224.250.200)The article discusses three reasons for dissatisfaction with regard to the core of contemporary macroeconomics and its inability to conceive the outbreak of the Great Recession. The first comes from the excessive importance given to the demand for microeconomic foundations to the detriment of treating the problem of the aggregation and coordination of individual behaviours, an imbalance that culminates in the frequent recourse to the figure of the representative consumer. The second concerns the usurpation by this same consumer of the role of decision-maker about employment and investment at the expense of firms, simple insignificant automata on markets governed by perfect or monopolistic competition. The third involves the simplistic way in which the rational expectations hypothesis has often been applied, treating agents as observers rather than actors who create the conditions for realizing their own forecasts. These three reasons lead to arguing for a macroeconomic modelling that takes the heterogeneity of agents seriously and restores to farfrom-insignificant firms a driving role in the process of making decisions about employment and investment, in a context of strategic interactions.

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The Dixit–Stiglitz economy with a ‘small group’ of firms: A simple and robust equilibrium markup formula

Cited by 11 publications

References 15 publications

Monopolistic competition, as you like it

Monopolistic competition, as you like it

The Impact of Water and Soil Scarcity and Pollution on Industrial Agglomeration: Evidence from China

The Winter of our Discontent

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