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A General Theory of Endogenous Market Structures

Paolo Bertoletti () and Federico Etro ()

No 81, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: We provide a unified approach to imperfect (monopolistic, Bertrand and Cournot) competition equilibria with demand functions derived from symmetric preferences over a large but finite number of goods. The equilibrium markups depend on the Morishima Elasticity of Substitution/Complementarity between goods, and can be derived directly from the utility functions and ranked unambiguously. We characterize the endogenous market structures, their dependence on market size, income and firms’ productivity and compare them with the optimal allocations. Finally, we apply our results to the case of preferences such as Generalized Leontief, Generalized linear and Generalized quadratic that we introduce in the literature on imperfect competition.

Keywords: Monopolistic Competition; Imperfect Competition; Elasticity of Substitution; Free Entry (search for similar items in EconPapers)
JEL-codes: D11 D43 L11 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-06
New Economics Papers: this item is included in nep-com and nep-ind
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http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0081.pdf (application/pdf)

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Working Paper: A General Theory of Endogenous Market Structures (2014) Downloads
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