Markups and the number of firms in a simple model of imperfect competition

Cheng-wei Chang and Ching-chong Lai

Economics Letters, 2012, vol. 116, issue 3, 277-280

Abstract: Two counter-intuitive results regarding the number of firms emerge from the existing monopolistic competition literature. First, the number of firms is positively related to the extent of the monopoly power. Second, when the goods market is perfectly competitive, the number of firms is reduced to zero. This paper proposes a plausible way to escape from these two counter-intuitive deficiencies.

Keywords: Monopolistic competition; Endogenous entry; Market power (search for similar items in EconPapers)
JEL-codes: E31 E32 L11 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:3:p:277-280

DOI: 10.1016/j.econlet.2012.04.005

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