Toward a theory of monopolistic competition

Jacques Thisse, Mathieu Parenti () and Philip Ushchev

No 10014, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a general model of monopolistic competition, which encompasses existing models while being flexible enough to take into account new demand and competition features. The basic tool we use to study the market outcome is the elasticity of substitution at a symmetric consumption pattern, which depends on both the per capita consumption and the total mass of varieties. We impose intuitive conditions on this function to guarantee the existence and uniqueness of a free-entry equilibrium. Comparative statics with respect to population size, GDP per capita and productivity shock are characterized through necessary and sufficient conditions. Finally, we show how our approach can be generalized to the case of a multisector economy and extended to cope with heterogeneous firms and consumers.

Keywords: Monopolistic competition; General equilibrium; Additive preferences; Homothetic preferences (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (30)

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Related works:
Journal Article: Toward a theory of monopolistic competition (2017)
Working Paper: Toward a Theory of Monopolistic Competition (2017)
Working Paper: Toward a theory of monopolistic competition (2017)
Working Paper: Toward a Theory of Monopolistic Competition (2016)
Working Paper: Toward a theory of monopolistic competition (2015)
Working Paper: Toward a theory of monopolistic competition (2014)
Working Paper: Toward a theory of monopolistic competition (2014)
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