ENTRY AND EXIT, PRODUCT VARIETY, AND THE BUSINESS CYCLE
type="main" xml:id="ecin12091-abs-0001"> We study the stochastic behavior of a dynamic general equilibrium model with monopolistic competition. Each seller sells his product in the consumption goods as well as the investment goods market and has market power in both. Consumers derive utility from a constant elasticity of substitution (CES) aggregate of all the consumption goods and augment their capital stock by a CES aggregate of all the investment goods. We analyze the equilibrium of this economy allowing for an endogenous determination of the number of firms and therefore of products. The principal effect we wish to highlight is the endogenous propagation and magnification of technology and preference disturbances through product space variations. <fi>(</fi>JEL <fi>E32, D43, L16)</fi>
Year of publication: |
2014
|
---|---|
Authors: | CHATTERJEE, SATYAJIT ; COOPER, RUSSELL |
Published in: |
Economic Inquiry. - Western Economic Association International - WEAI, ISSN 0095-2583. - Vol. 52.2014, 4, p. 1466-1484
|
Publisher: |
Western Economic Association International - WEAI |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Participation Dynamics: Sunspots and Cycles
Chatterjee, Satyajit, (1990)
-
Multiplicity of Equilibria and Fluctuations in Dynamic Imperfectly Competitive Economies.
Chatterjee, Satyajit, (1989)
-
Strategic Complementarity in Business Formation: Aggregate Fluctuations and Sunspot Equilibria.
Chatterjee, Satyajit, (1993)
- More ...