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Market Power, Coordination Failures and Endogenous Fluctuations

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  • d ASPREMONT, Claude,

    ()
    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • DOS SANTOS FERREIRA , Rodolphe

    (BETA, Universite Louis Pasteur, Strasbourg)

  • GERARD-VARET , Louis-André

    (GREQAM, Ecole des Hautes Etudes en Sciences Sociales, Marseille)

Abstract

vVe analyse an overlapping generations economy with Cournotian monopolistic competition in the produced goods markets and perfect competition in the labour market. All prices are perfectly flexible and no adjustments costs are introduced. We show that these features lead to properties qualitatively different from those obtained when all markets are perfectly competitive. First there is a possibility of multiple Pareto-ranked temporary or stationary equilibria. Second, a preliminary analysis of the intertemporal equilibria shows that imperfect competition opens up new possibilities of endogenous fluctuations, and may lead to non-monotonicity of all equilibria in prices and output. These results are essentially based on two features, naturally associated with imperfect competition, increasing returns to scale and the variability of oligopolistic market power as a consequence of the variability of demand elasticity.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1994068.

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Date of creation: 01 Dec 1994
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Handle: RePEc:cor:louvco:1994068

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Cited by:
  1. Brito, Paulo B. & Costa, Luís F. & Dixon, Huw, 2013. "Non-smooth dynamics and multiple equilibria in a Cournot–Ramsey model with endogenous markups," Journal of Economic Dynamics and Control, Elsevier, vol. 37(11), pages 2287-2306.
  2. Coimbra, Rui & Lloyd-Braga, Teresa & Modesto, Leonor, 2002. "Endogenous Growth Fluctuations in Unionised Economy with Productive Externalities," CEPR Discussion Papers 3230, C.E.P.R. Discussion Papers.
  3. Pasquale Commendatore & Ingrid Kubin, 2005. "Dynamic Effects of Regulation and Deregulation in Goods and Labour Markets," Working Papers geewp49, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  4. repec:hal:cesptp:halshs-00266713 is not listed on IDEAS
  5. repec:hal:cesptp:halshs-00130200 is not listed on IDEAS
  6. Guido Cazzavillan & Patrick Pintus, 2006. "Endogenous Business Cycles and Dynamic Inefficiency," Working Papers 2006_37, Department of Economics, University of Venice "Ca' Foscari".
  7. Bosi, Stefano & Seegmuller, Thomas, 2008. "Can heterogeneous preferences stabilize endogenous fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 624-647, February.
  8. Marta Aloi & Huw D. Dixon & Teresa Lloyd-Braga, 1998. "Endogenous Fluctuations In an Open Economy with Increasing Returns to Scale," Discussion Papers 98-03, University of Copenhagen. Department of Economics.
  9. Paulo Brito & Luis Costa & Huw Dixon, 2007. "Business Cycles with Endogenous Mark-ups," Money Macro and Finance (MMF) Research Group Conference 2006 108, Money Macro and Finance Research Group.

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