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On The Social Efficiency In Monopolistic Competitioin Models

Author

Listed:
  • Igor G. Pospelov

    (National Research University Higher School of Economics)

  • Stanislav A. Radionov

    (National Research University Higher School of Economics)

Abstract

We consider standard monopolistic competition models with aggregate consumer's preferences de ned by two well-known classes of utility functions | the Kimball utility function and the variable elasticity of substitution utility function. It is known that market equilibruim is ecient only for the special case when utility function has a constant elasticity of substitution, but we nd that in both cases a special tax on rms' output may be introduced such that market equilibrium becomes ecient

Suggested Citation

  • Igor G. Pospelov & Stanislav A. Radionov, 2014. "On The Social Efficiency In Monopolistic Competitioin Models," HSE Working papers WP BRP 80/EC/2014, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:80/ec/2014
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    More about this item

    Keywords

    monopolistic competition; eciency.;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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