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Non-smooth Dynamics and Multiple Equilibria in a Cournot-Ramsey Model with Endogenous Markups

Paulo Brito (), Luis Costa () and Huw Dixon ()

No E2008/21, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We consider a Ramsey model with a continuum of Cournotian industries where free entry generates an endogenous markup. The model produces two different regimes: monopoly and oligopoly. We study the non-smooth dynamics and analyze the global dynamics of the model, demonstrating the model exhibits robust heteroclinic orbits, either of the smooth or the non-smooth type. Similar economies may be in any of these regimes and they may change regime along its convergence path. Productivity, fixed costs and elasticities of demand, play a crucial role and changing their values may induce a discontinuous transition or hysteresis.

Keywords: endogenous mark-ups; non-smooth dynamics; discontinuous induced bifurcations; heteroclinic orbits (search for similar items in EconPapers)
JEL-codes: C62 D43 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mac and nep-mic
Date: 2008-09, Revised 2010-07
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Related works:
Journal Article: Non-smooth dynamics and multiple equilibria in a Cournot–Ramsey model with endogenous markups (2013) Downloads
Working Paper: Non-Smooth Dynamics and Multiple Equilibria in a Cournt-Ramsey Model with Endogenous Markups (2010) Downloads
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