The Effects of Entry under the Coexistence of Oligopolistic and Monopolistic Competition

Kenji Fujiwara ()

No 174, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper proposes a model of a continuum of industries in which some industries are monopolistically competitive, the others are oligopolistic, and they interact in a labor market. We use this model to examine the effects of an increase in the number of oligopolistic firms. We first show that this raises the equilibrium wage and induces exit of monopolistically competitive firms. Then, we find that the profits of each oligopolistic firm and the whole oligopolistic industry decrease. Finally, we establish that if the elasticity of substitution is the same in all industries, welfare improves as a result of an increase in the oligopolistic firms.

Keywords: Monopolistic competition; oligopoly; general equilibrium; entry; welfare (search for similar items in EconPapers)
JEL-codes: D43 L13 L40 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2018-02, Revised 2018-02
New Economics Papers: this item is included in nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:174

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