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Endogenous Markups and Fiscal Policy
Author(s) -
Costa Luís F.
Publication year - 2004
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2004.00419.x
Subject(s) - monopolistic competition , economics , general equilibrium theory , markup language , fiscal policy , microeconomics , monetary economics , macroeconomics , monopoly , computer science , xml , operating system
This paper analyses a simple imperfectly competitive general equilibrium model where the entry mechanism generates an endogenous markup. In this second‐best world fiscal policy is more effective than in Walrasian or in fixed‐markup monopolistic competition models, as it produces efficiency gains through entry.