The impact of macroeconomic policies in a oligopolistic economy with entry

Dick Damania and Peter Summers
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Dick Damania: Flinders University of South Australia

No 1997032, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper examines the impact macroeconomic policies in a system where the product market is modelled as an oligopolistic supergame in which potential entrants incur sunk entry costs. It is shown that policies which affect the interest rate, influence both the degree of competition in the industry and the structure of the industry. Moreover, it is demonstrated that when sunk entry costs are introduced in to the model firms respond in an asymmetric manner to policy changes. These results suggest that the economy may exhibit hysteresis.

JEL-codes: D43 E63 (search for similar items in EconPapers)
Pages: 19
Date: 1997-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvre:1997032

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