Monopolistic Competition, As You Like It

Paolo Bertoletti () and Federico Etro ()

No 454, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: We study monopolistic competition with asymmetric preferences over a variety of goods provided by heterogeneous firms, and show how to compute equilibria (which approximate Cournot and Bertrand equilibria when market shares are negligible) through the Morishima measures of substitution. Further results concerning pricing and entry emerge under homotheticity and when demands depend on a common aggregator, as with GAS preferences. Under additivity we can determine which goods are going to be provided under free entry, and the selection effects associated with changes in market size (i.e. opening up markets), consumers' Â’income (i.e. demand shocks), aggregate productivity (i.e. supply shocks or technological growth) and preference parameters.

Keywords: Monopolistic competition; Asymmetric preferences; Heterogeneous firms; Generalized separability; Variable markups (search for similar items in EconPapers)
JEL-codes: D11 D43 L11 (search for similar items in EconPapers)
Pages: 38
Date: 2020-11
New Economics Papers: this item is included in nep-com and nep-ore
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Related works:
Journal Article: Monopolistic competition, as you like it (2022)
Working Paper: Monopolistic Competition, As You Like It (2018)
Working Paper: Monopolistic Competition, As You Like It (2017)
Working Paper: Monopolistic Competition, As You Like It (2017)
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