IDEAS home Printed from https://ideas.repec.org/p/cor/louvrp/2175.html

On monopolistic competition and optimal product diversity: workers' rents also matter

Author

Listed:
  • PICARD, Pierre M.
  • TOULEMONDE, Eric

Abstract

In the Dixit-Stiglitz model of monopolistic competition, entry of firms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that workers' rents also contribute to explain excess entry through a general equilibrium mechanism. Larger wages indeed raises the aggregate earnings and firms sales and profits, which entices too many firms to enter. We discuss the possibility of over-provision of varieties by comparing the equilibrium to unconstrained and constrained social optima and to other regulatory framework where wages are not controlled.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • PICARD, Pierre M. & TOULEMONDE, Eric, 2009. "On monopolistic competition and optimal product diversity: workers' rents also matter," LIDAM Reprints CORE 2175, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2175
    DOI: 10.1111/j.1540-5982.2009.01553.x
    Note: In : Canadian Journal of Economics/Revue canadienne d'Economique, 42(4), 1347-1360, 2009
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Iwaisako, Tatsuro, 2019. "Welfare analysis of uniform entry tax in a general equilibrium model with heterogeneous industries," Economics Letters, Elsevier, vol. 178(C), pages 54-57.
    2. Amitrajeet Batabyal & Peter Nijkamp, 2014. "Innovation, Decentralization, and Planning in a Multi-Region Model of Schumpeterian Economic Growth," Networks and Spatial Economics, Springer, vol. 14(3), pages 605-628, December.
    3. Wei-Bin Zhang, 2018. "An Integration of Solow’s Growth and Dixit-Stiglitz’s Monopolistic Competition Models," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(4), pages 3-19, October-D.
    4. Wei-Bin Zhang, 2019. "Competition versus Monopolistic Competition by Integrating Solow-Uzawa and Dixit-Stiglitz," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 390-400, December.
    5. Pierre M. Picard & Eric Toulemonde, 2009. "On monopolistic competition and optimal product diversity: workers' rents also matter," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1347-1360, November.

    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cor:louvrp:2175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.