Monopolistic Competition, Nonhomotheticity, and the Stability of the Chamberlinian Tangency Solution

Chi-Chur Chao and Akira Takayama

International Economic Review, 1990, vol. 31, issue 1, 73-86

Abstract: The focal point in the recent literature on international trade and monopolistic competition is to recast the Chamberlinian partial equilibrium theory in a general equilibrium framework. Using a similar setting, this paper asks whether the Chamberlinian tangency solution is stable under general equilibrium. Paradoxical results follow. When entry occurs, profit per firm can increase and the tangency solution can be unstable. A necessary and sufficient condition for stability is obtained. The concepts of average and marginal factor intensities play an important role in obtaining the stability. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1990
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://links.jstor.org/sici?sici=0020-6598%2819900 ... O%3B2-2&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
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:ier:iecrev:v:31:y:1990:i:1:p:73-86

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and ().