Monopolistic competition with generalized additively separable preferences

Paolo Bertoletti () and Federico Etro ()

Oxford Economic Papers, 2021, vol. 73, issue 2, 927-952

Abstract: We study monopolistic competition equilibria with free entry and social planner solutions under symmetric generalized additively separable preferences, which encompass known cases such as additive, homothetic, translog and other preferences. This setting can jointly produce competition and selection effects of entry, incomplete pass-through of cost changes and pricing to market. We discuss the inefficiencies of the market equilibrium under Gorman-Pollak preferences and show its optimality under implicit constant elasticity of substitution preferences. We propose a new specification of generalized translated power preferences, and discuss applications to trade and macroeconomics.

JEL-codes: D1 D4 E3 L1 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (12)

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