Centre for Development Economics
Department of Economics, Delhi School of Economics


A General Theory of Endogenous Market Structures (and the Addilog model of Trade)


Federico Etro

University of Venice

Monday, 20th July 2015 at 3:00 PM

Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics

All are cordially invited

We provide a unified approach to imperfect (monopolistic, Bertrand and Cournot) competition equilibria when preferences are symmetric over a finite but endogenous number of goods. Equilibrium markups depend on the Morishima Elasticity of Substitution/Complementarity, that can be derived directly from the utility functions, and on the number of goods. We characterize the endogenous market structures, discuss their comparative statics with respect to market size, consumers income and productivity that are crucial for trade and macroeconomic applications, and compare them with the optimal allocations. Finally, we analyze the cases of unexplored preferences such as Generalized Leontief, linear and quadratic preferences that produce closed form solutions with interesting properties.
We discuss the addilog model of trade (by Bertoletti, Etro and Simonovska) and its implications for the international economy.

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