I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP fluctuations into technical change, economic profit and markup fluctuations. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward...

This note investigates the possibility of profit raising entry in network industries where firms follow Corporate Social Responsibility (CSR) behaviours, showing the interaction between the network and CSR features. In particular, for high levels of the network effect, an incumbent’s profits...

Weyl and Fabinger (2013) analyze the social incidence of competition and theoutput and welfare effects of third-degree price discrimination by considering thehypothetical entrance of exogenous quantity into a market. The formulas they use forthis purpose, however, are correct only for marginal...

Barriers to entry are regarded as major impediments to the working of markets. Entry must not necessarily actually take place - the perceived threat of entry may encourage incumbent firms to behave as if they are in a competitive market, even if they are not. We present empirical evidence on...

In the framework of symmetric Cournot oligopoly, this paper provides two minimal sets of assumptions on the demand and cost functions that imply respectively that, as the number of firms increases, the minimal and maximal equilibria lead to (i) decreasing industry price and increasing or...

Why are higher quality niches seen as intrinsically more profitable in business circles? Why do high quality products sometimes have a low real price, while it is unusual to see low quality products with high real prices? Can markets have quality differentiation as well as quality bunching? In...

An important and controversial stylized fact in industrial organization is the positive correlation between industry profit and concentration. There are many interpretations of this finding. One view is based on the classic theories of Chamberlin and Stigler, which imply that concentrated...

This paper shows how market entry into an unprofitable market can be profitable for a firm. A firm's expansion into a new market can have a beneficial feedback effect for that firm in its "old market". By entering into a new market, the firm increases its produced quantity and has higher...

Despite the European Commission’s concrete steps to integrate the national car markets and reduce car price dispersion, significant car price differences exist. Moreover, international differences in taxation of sales and registration of motor vehicles do not give rise to considerable...

Many economists are aware that the FOCs for efficiency and monopolization in a partial equilibrium framework are the extremes of the Ramsey (1927)-Boiteux (1956) FOC when the Lagrange multiplier for the budget varies. The object of this note is to formalize the duality between the welfarist and...