Dhingra, S. and Morrow, John (2019) Monopolistic competition and optimum product diversity under firm heterogeneity. Journal of Political Economy 127 (1), pp. 196-232. ISSN 0022-3808.
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Abstract
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 margins 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 and 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.
Metadata
| Item Type: | Article |
|---|---|
| Keyword(s) / Subject(s): | Efficiency, Productivity, Social welfare, Demand elasticity, Markups |
| School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
| Depositing User: | Administrator |
| Date Deposited: | 26 Mar 2018 06:35 |
| Last Modified: | 02 Aug 2023 17:40 |
| URI: | https://eprints.bbk.ac.uk/id/eprint/21868 |
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