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Pá 05.05.2023

Paolo Bertoletti (University of Milano-Bicocca) "Monopolistic Competition: Entry, Firm Selection and Efficiency"

Prof. Paolo Bertoletti

University of Milano-Bicocca, Italy

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Authors: Paolo Bertoletti, Federico Etro

Abstract: We study monopolistic competition among heterogeneous firms under quasi-linear preferences with an indirectly additive aggregator. Market equilibrium selection of firms and their sizes turn out to be optimal for a family of surplus functions that generate linear, exponential and iso-elastic demands, and the overall allocation is actually efficient for a generalization of the LogSumExp specification. Insufficient entry generally arises in allocations constrained by equilibrium pricing.

JEL Classification: D11, D43, L11
Keywords: Monopolistic competition, Quasi-linear preferences, Indirectly additive preferences, Heterogeneous firms, Insufficient Entry

Full Text: Monopolistic Competition: Entry, Firm Selection and Efficiency