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Oligopolistic vs. monopolistic competition: do intersectoral effects matter?

Author

Listed:
  • Claude d'ASPREMONT
  • Rodolphe DOS SANTOS FERREIRA

Abstract

Recent extensions of the standard Dixit-Stiglitz (1977) model, that go beyond the CES sub-utility assumption, while maintaining monopolistic competition, have mainly emphasized the role of intrasectoral substitutability. We argue that introducing oligopolistic competition can be an alternative extension, still tractable, allowing to restore the role of intersectoral substitutability and reinforcing the general equilibrium dimension of the model. For this purpose, we use the concept of oligopolistic equilibrium and derive a comprehensive formula to characterize the set of potential equilibria with varying competitive toughness. For two particular competitive regimes, price competition and quantity competition, we show how, with strategic interactions, procompetitive or anti-competitive effects now depend on the elasticity of intersectoral substitution as compared to the elasticity of intrasectoral substitution.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Claude d'ASPREMONT & Rodolphe DOS SANTOS FERREIRA, 2016. "Oligopolistic vs. monopolistic competition: do intersectoral effects matter?," LIDAM Reprints CORE 2797, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2797
    Note: In : Economic Theory, 62(1), 299-324, 2016
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    Cited by:

    1. Etro, Federico, 2023. "Technologies for endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 105(C).
    2. Fujiwara Kenji, 2020. "The Effects of Entry when Monopolistic Competition and Oligopoly Coexist," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-11, June.
    3. Paolo Bertoletti & Federico Etro, 2022. "Monopolistic competition, as you like it," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 293-319, January.
    4. d’Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2017. "The Dixit–Stiglitz economy with a ‘small group’ of firms: A simple and robust equilibrium markup formula," Research in Economics, Elsevier, vol. 71(4), pages 729-739.
    5. Vera Ivanova & Philip Ushchev, 2019. "Product Differentiation, Competitive Toughness, and Intertemporal Substitution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1244-1269, July.
    6. Ronald R. Kumar & Peter J. Stauvermann, 2020. "Economic and Social Sustainability: The Influence of Oligopolies on Inequality and Growth," Sustainability, MDPI, vol. 12(22), pages 1-23, November.
    7. Kristian Behrens & Sergey Kichko & Philip Ushchev & Sergei Kichko, 2018. "Intersectoral Markup Divergence," CESifo Working Paper Series 6965, CESifo.
    8. Etro, Federico, 2017. "Research in economics and monopolistic competition," Research in Economics, Elsevier, vol. 71(4), pages 645-649.
    9. Heid, Benedikt & Stähler, Frank, 2024. "Structural gravity and the gains from trade under imperfect competition: Quantifying the effects of the European Single Market," Economic Modelling, Elsevier, vol. 131(C).
    10. d’Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2020. "Exploiting separability in a multisectoral model of oligopolistic competition," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 51-59.
    11. Kenji Fujiwara, 2018. "The Effects of Entry under the Coexistence of Oligopolistic and Monopolistic Competition," Discussion Paper Series 174, School of Economics, Kwansei Gakuin University, revised Feb 2018.
    12. Makoto Yano & Takashi Komatsubara, 2018. "Price competition or price leadership," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 1023-1057, December.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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