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A General Theory of Endogenous Market Structures

Federico Etro () and Paolo Bertoletti ()

No 2014:09, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

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: I24 J24 J31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014
New Economics Papers: this item is included in nep-com and nep-upt
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