Markups and the number of firms in a simple model of imperfect competition

Two counter-intuitive results regarding the number of firms emerge from the existing monopolistic competition literature. First, the number of firms is positively related to the extent of the monopoly power. Second, when the goods market is perfectly competitive, the number of firms is reduced to zero. This paper proposes a plausible way to escape from these two counter-intuitive deficiencies.

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Year of publication:	2012
Authors:	Chang, Cheng-wei ; Lai, Ching-chong
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 116.2012, 3, p. 277-280
Publisher:	Elsevier
Subject:	Monopolistic competition \| Endogenous entry \| Market power

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Type of publication:	Article
Classification:	E31 - Price Level; Inflation; Deflation ; E32 - Business Fluctuations; Cycles ; L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010594077