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Monopolistic competition and non-neighboring-goods (*)


  • MÂrio Rui PÂscoa

    (Faculdade de Economia, Universidade Nova de Lisboa, Travessa EstËvÇo Pinto , P-1070 Lisboa, PORTUGAL)


This paper studies price games played by a continuum of differentiated producers who face demands generated by additively separable preferences exhibiting a non-neighboring goods property. The examples of exact equilibria show that an asymmetric Chamberlian outcome is compatible with nonzero profits for nonmarginal firms and also with constant average costs, contrary to long sustained views. The paper tries also to short out the structure behind this class of examples and identify as general features the presence of nonperfectly elastic demands facing individual firms and the existence of an approximate Chamberlinian equilibrium.

Suggested Citation

  • MÂrio Rui PÂscoa, 1996. "Monopolistic competition and non-neighboring-goods (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 129-142.
  • Handle: RePEc:spr:joecth:v:9:y:1996:i:1:p:129-142
    Note: Received: July 15, 1994; revised version December 4, 1995

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General


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