The Theory of Endogenous Market Structures: A Survey

Federico Etro ()

No 2012_11, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: Most market structures are neither perfectly or monopolistically competitive: they are characterized by a small number of large firms engaged in strategic interactions in their production and investment decisions. Yet, most of our economic theories are still based on a simplified world where firms are either small price takers producing under constant returns to scale (perfect competition) or isolated price setters (monopolistic competition). The theory of EMSs analyzes markets in partial and general equilibrium where strategies affect entry and entry affects strategies, and only exogenous primitive conditions on technology and preferences affect the equilibrium outcome. Understanding market structures means to understand how many firms are active in a market, which strategies they adopt and how primitive conditions and policy shocks affect them in a static or dynamic perspective.

Keywords: Endogenous entry; oligopoly; sunk costs; general equilibrium (search for similar items in EconPapers)
JEL-codes: E20 E32 F12 L1 (search for similar items in EconPapers)
Pages: 46
Date: 2012
New Economics Papers: this item is included in nep-com and nep-ind
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