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on Industrial Organization |
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Issue of 2016‒02‒04
four papers chosen by |
| By: | Mathieu Parenti (National Research University Higher School of Economics); Philip Ushchev (National Research University Higher School of Economics); Jacques-Francois Thisse (National Research University Higher School of Economics) |
| Abstract: | We propose a general model of monopolistic competition which encompasses existing models while being exible enough to take into account new demand and competition features. Even though preferences need not be additive and/or homothetic, the market outcome is still driven by the sole variable elasticity of substitution. We impose elementary conditions on this function to guarantee empirically relevant properties of a free-entry equilibrium. Comparative statics with respect to market size and productivity shock are characterized through necessary and sucient conditions. Furthermore, we show that the attention to the constant elasticity of substitution (CES) based on its normative implications was misguided: constant mark-ups, additivity and homotheticity are neither necessary nor sucient for the market to deliver the optimum outcome. Our approach can cope with heterogeneous rms once it is recognized that the elasticity of substitution is rm-specic. Finally, we show how our set-up can be extended to cope with multiple sectors. |
| Keywords: | monopolistic competition, general equilibrium, additive preferences, homothetic preferences. |
| JEL: | D43 L11 L13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:121/ec/2016&r=ind |
| By: | Villas-Boas, Sofia B; Chambolle, Claire |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2015–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt0wz728n8&r=ind |
| By: | Bhattacharya, Haumanti; Innes, Robert |
| Abstract: | Competing theories in industrial organization predict that more concentrated industries will lead to a smaller and more efficient variety of products, or alternately, a larger and less efficient array of products. This paper presents an empirical study of these competing implications that estimates the impact of market concentration on new product introductions in a panel of nine food processing industries over 1983 to 2004. Controlling for industry-level unobservables (using fixed effects) and endogeneity of industry market structure, we find that industry concentration promotes the introduction of new products. Preliminary evidence also suggests that new product introductions spur subsequent food industry mergers. Both conclusions are consistent with the “entry for merger” theory of product variety wherein small firms introduce new products in anticipation of profitable future mergers with concentrated firms. |
| Keywords: | New Product Introductions, Market Concentration, Mergers, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, L1, L2, L66, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa16:212836&r=ind |
| By: | Villas-Boas, Sofia B; Turolla, Stephane; Chambolle, Claire; Allain, MArie-Laure |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2016–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt30t981mm&r=ind |