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Monopolistic Competition with GAS Preferences

Paolo Bertoletti () and Federico Etro ()

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: We study monopolistic competition equilibria with free entry and social planner solutions under symmetric Generalized Additively Separable preferences (that 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 characterize the inefficiencies of the market equilibrium under Gorman-Pollak preferences and show its optimality under implicit CES preferences. We propose a new specification of generalized translated power preferences for trade and macroeconomic applications.

Keywords: Monopolistic competition; GAS preferences; Heterogeneous firms (search for similar items in EconPapers)
JEL-codes: D1 D4 E3 L1 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2019
New Economics Papers: this item is included in nep-com and nep-mac
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