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Monopolistic Competition with GAS Preferences

Paolo Bertoletti () and Federico Etro ()

No 165, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: We study monopolistic competition equilibria with free entry under symmetric Generalized Additively Separable preferences, whose demand systems feature a single aggregator of prices or quantities. They include Gorman-Pollak preferences (which nest directly and indirectly additive preferences, a homothetic family and other preferences) and implicit CES preferences. With heterogeneous ?rms our extension of the Melitz model produces a variety of pricing and selection effects, and allows us to solve the social planner problem. We illustrate the inefficiency of the market equilibrium for a new speci?cation of generalized translated power preferences, and show its optimality for the entire class of implicit CES preferences.

Keywords: Monopolistic competition; GAS preferences; Heterogeneous fi?rms (search for similar items in EconPapers)
JEL-codes: D11 D43 L11 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018-07
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/DEMWP0165.pdf (application/pdf)

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Working Paper: Monopolistic Competition with GAS Preferences (2019) Downloads
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