| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5058494 | Economics Letters | 2015 | 4 Pages |
Abstract
â¢Non-monotonic link between market concentration and welfare under monopolistic competition.â¢Differentiated impact of exogenous and endogenous sunk costs on welfare.â¢Endogenous cross-product substitutability in a Dixit-Stiglitz model of monopolistic competition.
This paper analyzes the relationship between market structure and welfare by developing a model of monopolistic competition in which exogenous entry costs and endogenous differentiation costs determine market concentration and market power. A non-monotonic link is identified between these costs and welfare under a decentralized equilibrium. These results detail new reasons why simple market concentration indicators are a misleading statistic for welfare evaluations.
Related Topics
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Economics and Econometrics
Authors
Nelson Sá,