Business cycle in an oligopolistic economy with entry and exit

Marco Mazzoli and Simone Lombardini

Journal of Macroeconomics, 2021, vol. 69, issue C

Abstract: In this paper we introduce a microfounded macromodel with endogenous market structure, where macroeconomic fluctuations may be determined by firms’ strategic interactions, entry and exit. All the agents have the same preferences but may differ in their budget constraints and change their social status according to idiosyncratic stochastic shocks that trigger entry, while exit is caused by firms’ bankruptcies. Our numerical simulations show that birth and death of firms (associated with entry and exit) can generate macroeconomic fluctuations without technology shocks.

Keywords: Business fluctuations; Industrial organization and macroeconomics (search for similar items in EconPapers)
JEL-codes: E32 L16 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:69:y:2021:i:c:s0164070421000409

DOI: 10.1016/j.jmacro.2021.103335

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