We examine the role of per capita income in closed and open economy models of monopolistic competition based on non-homothetic directly additive preferences à la Dixit-Stiglitz, as in Krugman (1979). In a closed economy with free entry income is always neutral on markups and firm size. In a...

We argue that the output criterion for price discrimination is not robust to the introduction of even arbitrarily small marginal cost differences. However, welfare improvements can be validly assessed by replacing it with the computation of well-known price indexes which are not informatively...