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Modelling Policy Issues in a World of Imperfect Competition

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  • Dierker, Egbert
  • Grodal, Birgit

Abstract

General equilibrium theory constitutes a sound basis for the discussion of policy issues if firms do not have market power. However, if firms influence prices strategically, the concept of profits loses its meaning due to the price normalization problem. Hence, it is unclear how to model the behavior of oligopolistic firms. In order to provide a conceptual foundation for the analysis of policy issues in the case of imperfect competition, the authors discuss ways to formulate the objective of a strategic firm. In particular, they investigate the concept of real wealth maximization that is based on profits as well as on shareholders' aggregate demand. Copyright 1998 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Dierker, Egbert & Grodal, Birgit, 1998. " Modelling Policy Issues in a World of Imperfect Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 153-179, March.
  • Handle: RePEc:bla:scandj:v:100:y:1998:i:1:p:153-79
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    Citations

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    Cited by:

    1. Egbert Dierker & Hildegard Dierker & Birgit Grodal, 2003. "Cournot-Nash Competition in a General Equilibrium Model of International Trade," Vienna Economics Papers 0308, University of Vienna, Department of Economics.
    2. WILLENBOCKEL Dirk, "undated". "The Numeraire Problem in General Equilibrium Models with Market Power: Much Ado About Nothing?," EcoMod2003 330700152, EcoMod.
    3. J. Peter Neary, 2002. "Globalisation and market structure," Working Papers 200220, School of Economics, University College Dublin.
    4. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
    5. Ramón Torregrosa, 2008. "Macroeconomic effects of an indirect tax substitution," Journal of Economics, Springer, vol. 94(3), pages 199-221, September.
    6. Dirk Willenbockel, 2005. "The Price Normalisation Problem in General Equilibriun Models with Oligopoly Power: An Attempt at Perspective," GE, Growth, Math methods 0505002, EconWPA.
    7. Collie, David R., 2015. "Taxation under Oligopoly in a General Equilibrium Setting," Cardiff Economics Working Papers E2015/15, Cardiff University, Cardiff Business School, Economics Section.
    8. Donald J. Brown & G.A. Wood, 2004. "The Social Cost of Monopoly Power," Cowles Foundation Discussion Papers 1466, Cowles Foundation for Research in Economics, Yale University.
    9. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    10. Anushree Sinha, 2010. "Productivity of Indian Informal Workers," Journal of South Asian Development, , vol. 5(1), pages 15-52, April.

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