Opp, Marcus M.; Parlour, Christine A.; Walden, Johan - In: Journal of Economic Theory 154 (2014) C, pp. 126-161
We develop a tractable dynamic general equilibrium model of oligopolistic competition with a continuum of heterogeneous industries. Industries are exposed to aggregate and industry-specific productivity shocks. Firms in each industry set value-maximizing state-contingent markups, taking as given...