Benassi, Corrado; Chirco, Alessandra; Colombo, Caterina - In: Metroeconomica 56 (2005) 3, pp. 305-317
We introduce non-homothetic preferences in the Dixit-Stiglitz model of monopolistic competition, and enquire about the effects of a change in income dispersion on the firms' optimal decisions and market equilibrium. Income dispersion, modeled as a mean preserving spread, is shown to affect only...