Real Business Cycles with Cournot Competition and Endogenous Entry

Andrea Colciago and Federico Etro ()

MPRA Paper from University Library of Munich, Germany

Abstract: We introduce Cournot competition and endogenous entry in an otherwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of business creation. Then, we develop a model à la Ramsey describing the dynamic interaction of consumption and business creation. Our models are able to explain why markups vary countercylically and profits are procyclical. The analysis of permanent and temporary technology and preference shocks and of the second moments suggests that our model can outperform the Real Business Cycle framework in many dimensions.

Keywords: Business Cycle; Cournot Competition; Endogenous Entry (search for similar items in EconPapers)
JEL-codes: E32 L13 (search for similar items in EconPapers)
Date: 2007-09-30, Revised 2008-02-25
New Economics Papers: this item is included in nep-bec, nep-com, nep-dge, nep-mac and nep-mic
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Real business cycles with Cournot competition and endogenous entry (2010)
Working Paper: Real Business Cycles with Cournot Competition and Endogenous Entry (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:7326

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