Some Efficiency Aspects of Monopolistic Competition: Innovation, Variety and Transaction Costs

Tamara Todorova ()

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: We stress some efficiency aspects of monopolistic competition justifying it on account of its tendency to innovate and the questionable excess capacity paradigm. Some further efficiency aspects revealed are product variety and transaction cost savings. We view the monopolistically competitive firm as an essential source of technological innovation, product variety and cost economies. While perfect competition is universally considered a benchmark and a social optimum, we consider it a strongly unrealistic theoretical setup where the monopolistically, rather than the perfectly, competitive firm turns out to be the true type of competition and social optimum in the real world of positive transaction costs. The monopolistically competitive firm not only offers product variety and innovation but is the optimal institutional arrangement under positive transaction costs.

Keywords: monopolistic competition; variety (search for similar items in EconPapers)
JEL-codes: D23 D24 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-com and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/148367/1/E ... ic%20Competition.pdf (application/pdf)

Related works:
Journal Article: Some Efficiency Aspects of Monopolistic Competition: Innovation, Variety and Transaction Costs (2021)
Working Paper: Some Efficiency Aspects of Monopolistic Competition: Innovation, Variety and Transaction costs (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:148367

Access Statistics for this paper

More papers in EconStor Preprints from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().