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Real business cycles with Cournot competition and endogenous entry

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  • Colciago, Andrea
  • Etro, Federico

Abstract

We introduce strategic interactions with quantity competition a` la Cournot and endogenous entry in an RBC model with homogenous goods. In the long run, the steady state mark up is decreasing in the capital share, in the discount factor and in the level of technology, while it is increasing in the rate of bankruptcy and in the entry cost. In the short run, a competition effect amplifies the propagation of the shocks and generates procyclical profits and countercyclical mark ups. We extend the model to different forms of competition (as imperfect collusion and Stackelberg competition). The analysis of technology and preference shocks and of the second moments suggests that the model outperforms the RBC in terms of variability of output, labor and, of course, profits and mark ups.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 32 (2010)
Issue (Month): 4 (December)
Pages: 1101-1117

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Handle: RePEc:eee:jmacro:v:32:y:2010:i:4:p:1101-1117

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Web page: http://www.elsevier.com/locate/inca/622617

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Keywords: Endogenous market structure Firms' entry; Business cycle;

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References

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Citations

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Cited by:
  1. Maria José Gil-Moltó & Dimitrios Varvarigos, 2012. "Industry Dynamics and Indeterminacy in an OLG Economy with Endogenous Occupational Choice," Discussion Papers in Economics 12/09, Department of Economics, University of Leicester, revised Sep 2012.
  2. Colciago , Andrea & Rossi, Lorenza, 2011. "Endogenous market structures and labour market dynamics," Research Discussion Papers 12/2011, Bank of Finland.
  3. Maria José Gil-Moltó & Dimitrios Varvarigos, 2013. "Endogenous Market Structure, Occupational Choice, and Growth Cycles," Discussion Papers in Economics 13/05, Department of Economics, University of Leicester.
  4. colciago, andrea & Rossi, Lorenza, 2011. "Endogenous Market Structures and the Business Cycle," MPRA Paper 29629, University Library of Munich, Germany.
  5. Andrea Colciago & Lorenza Rossi, 2011. "Endogenous Market Structures and Labor Market Dynamics (New version)," Quaderni di Dipartimento 155, University of Pavia, Department of Economics and Quantitative Methods.
  6. Totzek, Alexander, 2011. "Banks, oligopolistic competition, and the business cycle: A new financial accelerator approach," Economics Working Papers 2011,02, Christian-Albrechts-University of Kiel, Department of Economics.

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