Monopolistic Competition and Optimum Product Diversity under Firm Heterogeneity

• 成果类型: Article
• 署名作者: Dhingra, Swati; Morrow, John
• 署名单位: University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; University of London; Birkbeck University London
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/700732
• 发表日期: 2019
• 页码: 196-232
• 关键词: scale economies; market-size; TRADE; models; COSTS; RISK; selection; turnover; variety; markups

摘要

Empirical work has drawn attention to the high degree of productivity differences within industries and their 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 affect 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.