Markup cycles, dynamic misallocation, and amplification

• 成果类型: Article
• 署名作者: Opp, Marcus M.; Parlour, Christine A.; Walden, Johan
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2014.09.001
• 发表日期: 2014
• 页码: 126-161
• 关键词: Oligopolistic competition; Markup cycles; Allocative efficiency; dynamic games; DSGE models

摘要

We develop a tractable dynamic general equilibrium model of oligopolistic competition with a continuum of heterogeneous industries. Industries are exposed to aggregate and industry-specific productivity shocks. Firms in each industry set value-maximizing state-contingent markups, taking as given the behavior of all other industries. When consumers are risk-averse, industry markups are countercyclical with regards to the industry-specific component, but may be procyclical with regards to the aggregate shock. The general equilibrium dispersion of markups implied by the optimization of heterogeneous industries creates misallocation of labor across industries. The misallocation, in turn, generates aggregate welfare losses state-by-state that feed back into the industry problem via a representative agent's marginal utility of aggregate consumption. Misallocation dynamics may transmit industry-specific shocks, or amplify small aggregate shocks, and so lead to aggregate fluctuations through these feedback effects. (c) 2014 Elsevier Inc. All rights reserved.