Competition Policy in a Simple General Equilibrium Model

The flow of resources across sectors to their best use, with concomitant entry and exit, is central the functioning welfare properties a market economy. Nevertheless, most industrial organization research, including applications competition policy, undertakes partial equilibrium analysis in single sector, often fixed number firms. This article examines policy simple, multi-sector, general model free exit. Even yields some lessons, such as that accounting for makes strengthening more rather than less attractive. When admitting flows between sectors, familiar prescriptions readily reverse. But results may be partially offset or overturned yet again when incorporating exit nontargeted sectors. Finally, efficiencies also changes qualitatively because even costs are fully borne by consumers equilibrium.