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Monopolistic Competition And Search Unemployment

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  • Thomas Ziesemer

Abstract

In this paper the monopolistic competition model of Dixit and Stiglitz for the goods market and the search unemployment model of Pissarides are combined. The Pissarides part loses its Walrasian goods market and the Dixit-Stiglitz part loses its Walrasian labour market. Pissarides' results now depend on the degree of competition. In the Dixit-Stiglitz part the size and number of firms as well as aggregate output now depend on aggregate hiring costs, tightness and unemployment, while real wages are not fixed. Some partial results of comparative static properties of the original models survive. New results concerning the effects of changes in labour (goods) market parameters on goods markets (the labour market) variables are obtained and related to the literature on macroeconomic theory with endogenous unemployment and imperfect competition, empirical results and policy issues. Copyright Blackwell Publishing Ltd 2005.

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  • Thomas Ziesemer, 2005. "Monopolistic Competition And Search Unemployment," Metroeconomica, Wiley Blackwell, vol. 56(3), pages 334-359, July.
  • Handle: RePEc:bla:metroe:v:56:y:2005:i:3:p:334-359
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    References listed on IDEAS

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    1. Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
    2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    3. Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 477-494.
    4. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    5. Winfried Vogt, 1996. "Accelerating Inflation Or Rising Unemployment -Is There An Alternative?," Metroeconomica, Wiley Blackwell, vol. 47(2), pages 197-230, June.
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    Cited by:

    1. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 273-299, June.
    2. Christian Haefke & Monique Ebell, 2004. "The Missing Link: Product Market Regulation, Collective Bargaining and the European Unemployment Puzzle," 2004 Meeting Papers 759, Society for Economic Dynamics.
    3. Devashish Mitra & Priya Ranjan, 2007. "Offshoring and Unemployment," Working Papers 060719, University of California-Irvine, Department of Economics.
    4. Antonio Scial… & Riccardo Tilli, 2007. "Financing unemployment benefits by goods market competition: fiscal policy and deregulation with market imperfections," "Marco Fanno" Working Papers 0047, Dipartimento di Scienze Economiche "Marco Fanno".
    5. Philipp vom Berge, 2013. "Search unemployment and new economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 731-751, June.
    6. vom Berge, Philipp, 2011. "Search Unemployment and New Economic Geography," University of Regensburg Working Papers in Business, Economics and Management Information Systems 454, University of Regensburg, Department of Economics.
    7. Antonio ScialĂ  & Riccardo Tilli, 2009. "Financing Unemployment Benefits Through Fiscal Policies and Increasing Competition," The IUP Journal of Public Finance, IUP Publications, vol. 0(1), pages 53-67, February.

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