Distributional comparative statics with heterogeneous agents

Andreas Hefti

No 237, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We propose a formal way to systematically study the differential effects of exogenous shocks in economic models with heterogeneous agents. Our setting applies to models that can be rephrased as "competition for market shares" in a broad sense. We show that even in presence of any number of arbitrarily heterogeneous agents, a single recursion relation characterizes the distributional pattern of equilibrium market shares and related measures. We identify the general conditions under which the market share function rotates, thereby either causing more or less equality among the agents. Our setting highlights the exceptional rule that power functions play for the distributional effects. We apply our method across economic models, including examples from monopolistic competition, discrete choice, partial and general equilibrium theory and contest theory.

Keywords: Heterogeneity; inequality; monopolistic competition; general equilibrium; contest theory (search for similar items in EconPapers)
JEL-codes: C62 C65 C73 D72 D82 (search for similar items in EconPapers)
Date: 2016-11
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:237

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