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Real Business Cycles with Cournot Competition and Endogenous Entry

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  • Colciago, Andrea
  • Etro, Federico

Abstract

We introduce Cournot competition and endogenous entry in an otherwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of business 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 profits 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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7326.

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Date of creation: 30 Sep 2007
Date of revision: 25 Feb 2008
Handle: RePEc:pra:mprapa:7326

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Keywords: Business Cycle; Cournot Competition; Endogenous Entry;

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References

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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. Andrea Colciago & Lorenza Rossi, 2011. "Endogenous Market Structures and Labor Market Dynamics (New version)," Quaderni di Dipartimento, University of Pavia, Department of Economics and Quantitative Methods 155, University of Pavia, Department of Economics and Quantitative Methods.
  3. colciago, andrea & Rossi, Lorenza, 2011. "Endogenous Market Structures and the Business Cycle," MPRA Paper 29629, University Library of Munich, Germany.
  4. Maria José Gil-Moltó & Dimitrios Varvarigos, 2012. "Industry Dynamics and Indeterminacy in an OLG Economy with Endogenous Occupational Choice," Discussion Papers in Economics, Department of Economics, University of Leicester 12/09, Department of Economics, University of Leicester, revised Sep 2012.
  5. 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.
  6. Maria José Gil-Moltó & Dimitrios Varvarigos, 2013. "Endogenous Market Structure, Occupational Choice, and Growth Cycles," Discussion Papers in Economics, Department of Economics, University of Leicester 13/05, Department of Economics, University of Leicester.

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