We provide a unified approach to imperfect (monopolistic, Bertrand and Cournot) competition when preferences are symmetric over a finite but endogenous number of goods. Markups depend on the Morishima elasticity of substitution and on the number of varieties. The comparative statics of free-entry equilibria is examined, establishing the conditions for markup neutrality with respect to income, market size and productivity. We compare endogenous and optimal market structures for several non-CES examples. With a generalized linear direct utility the markup can be constant and optimal under monopolistic competition, and non-monotonic in the number of firms under Bertrand or Cournot competition.
Preferences, Entry and Market Structure
BERTOLETTI, PAOLO;
2016-01-01
Abstract
We provide a unified approach to imperfect (monopolistic, Bertrand and Cournot) competition when preferences are symmetric over a finite but endogenous number of goods. Markups depend on the Morishima elasticity of substitution and on the number of varieties. The comparative statics of free-entry equilibria is examined, establishing the conditions for markup neutrality with respect to income, market size and productivity. We compare endogenous and optimal market structures for several non-CES examples. With a generalized linear direct utility the markup can be constant and optimal under monopolistic competition, and non-monotonic in the number of firms under Bertrand or Cournot competition.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
