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...

In The Economics of Imperfect Competition, Joan Robinson argued that an increase of the consumers' incomes should make demand less elastic-which, although reasonable about individual demand as an assumption on preferences, suggests a role for income distribution as far as market demand is...

The paper proves the existence of a subgame perfect Nash equilibrium in a vertically differentiated duopoly with uncovered market, for a large set of symmetric and asymmetric distributions of consumers, including, among others, all logconcave distributions. The proof relies on the 'income share...

The first order approach to solving the standard one-dimensional principal-agent model is conditional upon the relevant stochastic production function obeying two noteworthy restrictions: that the Likelihood Ratio be monotonically increasing in output, and that the distribution function be...