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Substitutability and Competition in the Dixit-Stiglitz Model

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dc.creator Koeniger, Winfried
dc.creator Licandro, Omar
dc.date 2004
dc.date.accessioned 2013-10-16T07:09:28Z
dc.date.available 2013-10-16T07:09:28Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/20242
dc.identifier ppn:378733184
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/20242
dc.description The effects of competition on growth are analyzed in the recent literature by comparing economies with the same market structure but different degrees of substitutability. In this note, we show that in a general equilibrium model with monopolistic competition – la Dixit- Stiglitz the effect of substitutability on the allocation of resources is independent of the associated change in competition. Higher substitutability increases welfare, output and productivity because resources shift towards the most productive sectors. However, since markups are equal across sectors, changes in market power do not affect the relative price of consumption goods, implying that the induced changes in market power do not have any direct effect on equilibrium allocations.
dc.language eng
dc.relation IZA Discussion paper series 1007
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject L16
dc.subject ddc:330
dc.subject monopolistic competition
dc.subject substitution
dc.subject market power
dc.subject output
dc.subject Monopolistischer Wettbewerb
dc.subject Produktsubstitution
dc.subject Marktmacht
dc.subject Allgemeines Gleichgewicht
dc.subject Wirtschaftswachstum
dc.subject Theorie
dc.title Substitutability and Competition in the Dixit-Stiglitz Model
dc.type doc-type:workingPaper

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