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The 1987 market crash was associated with a dramatic and permanent steepening of the implied volatility curve for equity index options, despite minimal changes in aggregate consumption. We explain these events within a general equilibrium framework in which expected endowment growth and economic...
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producers. A robust prediction of oligopoly theory is that larger markets are more competitive and have lower price-cost markups …. Because producers in more competitive markets must sell more at a lower markup to recover their fixed costs, oligopoly theory … implies that larger and more competitive markets have larger producers. Our estimated market size effects indicate whether or …
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This paper develops a simple and robust implication of free entry followed by competition without substantial strategic interactions: Increasing the number of consumers leaves the distributions of producers' prices and other choices unchanged. In many models featuring non-trivial strategic...
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