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Real Business Cycles with Cournot Competition and Endogenous Entry

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  • Andrea Colciago

    ()

  • Federico Etro

    ()

Abstract

We introduce Cournot competition and endogenous entry in an oth- erwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of busi- ness creation. Then, we develop a model à la Ramsey describing the dynamic interaction of consumption and business creation. Our models are able to explain why markups vary countercylically and pro?ts are procyclical. The analysis of permanent and temporary technology and preference shocks and of the second moments suggests that our model can outperform the Real Business Cycle framework in many dimensions.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper135.pdf
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Bibliographic Info

Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 135.

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Length: 30 pages
Date of creation: Sep 2007
Date of revision: Feb 2008
Handle: RePEc:mib:wpaper:135

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Citations

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Cited by:
  1. Colciago, Andrea & Rossi, Lorenza, 2011. "Endogenous Market Structures and Labor Market Dynamics," MPRA Paper 29311, University Library of Munich, Germany.
  2. Federico Etro & Andrea Colciago, 2007. "Endogenous Market Structure and the Business Cycle," Working Papers 126, University of Milano-Bicocca, Department of Economics, revised Nov 2007.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

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