Monopolistic Competition and Optimum Product Diversity Under Firm Heterogeneity*
نویسندگان
چکیده
Empirical work has drawn attention to the high degree of productivity differences within industries, and its role in resource allocation. This paper examines the allocational efficiency of such markets. Productivity differences introduce two new sources of potential inefficiency: selection of the right distribution of firms and allocation of the right quantities across firms. We show that these considerations impact welfare and policy analysis. Market power across firms leads to distortions in resource allocation. Demand-side elasticities determine how resources are misallocated and when increased competition from market expansion provides welfare gains. JEL Codes: F1, L1, D6.
منابع مشابه
Monopolistic Competition and Optimum Product Selection
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