Monopoly Power and Endogenous Product Variety: Distortions and Remedies

• 成果类型: Article
• 署名作者: Bilbiie, Florin O.; Ghironi, Fabio; Melitz, Marc J.
• 署名单位: University of Lausanne; University of Washington; University of Washington Seattle; National Bureau of Economic Research; Center for Economic & Policy Research (CEPR); Harvard University; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20170303
• 发表日期: 2019
• 页码: 140-174
• 关键词: optimal monetary-policy; COMPETITION; entry

摘要

The inefficiencies related to endogenous product creation and variety under monopolistic competition are-two-fold: one static-the misalignment between consumers and producers regarding the value of a new variety; and one dynamic-time variation in markups. When production factors (labor and physical capital) are elastic and traded in competitive markets, further distortions appear. Appropriate taxation schemes can restore optimality if they preserve entry incentives. Quantitatively, the welfare costs of each distortion by itself amounts to 2 to 5 percent of consumption. But their overall cost when jointly present is greatly magnified, and generates up to a 25 percent welfare loss.