On the welfare effects and political economy of competition-enhancing policies

• 成果类型: Article
• 署名作者: Aghion, P; Schankerman, M
• 署名单位: Harvard University; Centre for Economic Policy Research - UK; University of London; London School Economics & Political Science
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2004.00244.x
• 发表日期: 2004
• 页码: 800-824
• 关键词: monopolistic competition; Firm entry; GROWTH; INNOVATION; EXIT

摘要

We analyse the welfare effects of policies that intensify product market competition, and the channels through which they operate. Using a circular model of horizontal product differentiation with asymmetric costs, we study the effects of increased price competition on market selection among incumbent firms, cost reduction effort, and entry of new firms. The model also generates an endogenous demand for competition-enhancing or retarding policies arising from cost heterogeneity, and we demonstrate the possibility of a 'low-competition' political economy trap. Simulations of the model illustrate that the selection effects we analyse, which traditional cost-benefit analysis is unlikely to capture, can be large.