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increases the within-industry variance of, sales and reduces welfare gains as consumers dislike price heterogeneity. Our theory … positively related to the degree of product market competition and to the variance of sales across firms. …
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The Lucas (1978) Tree Model lies at the heart of modern macro-finance. At its core, it provides an analysis of the equilibrium price of a long-lived asset in an exchange economy where consumption is the objective, and the sole purpose of the asset is to smooth consumption through time....
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