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Monopolistic competition, as you like it
Author(s) -
Bertoletti Paolo,
Etro Federico
Publication year - 2022
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.13030
Subject(s) - monopolistic competition , economics , cournot competition , microeconomics , free entry , market size , substitution (logic) , competition (biology) , aggregate (composite) , microfoundations , monopoly , econometrics , mathematical economics , computer science , ecology , materials science , macroeconomics , commerce , biology , composite material , programming language
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.