Reference : On monopolistic competition and optimal product diversity: workers' rents also matter
Scientific journals : Article
Business & economic sciences : Microeconomics
http://hdl.handle.net/10993/12886
On monopolistic competition and optimal product diversity: workers' rents also matter
English
Picard, Pierre M. mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Toulemonde, Eric [> >]
Nov-2009
Canadian Journal of Economics
Blackwell Publishing
42
4
1347-1360
Yes (verified by ORBilu)
International
0008-4085
Toronto
Canada
[en] In the Dixit-Stiglitz model of monopolistic competition, entry of rms is socially
too small. Other authors have shown that excess entry is also a possibility with other
preferences for diversity. We show that workers rents also contribute to explain
excess entry through a general equilibrium mechanism. Larger wages indeed raises
the aggregate earnings and rms sales and pro ts, which entices too many rms
to enter. We discuss the possibility of over-provision of varieties by comparing the
equilibrium to unconstrained and constrained social optima and to other regulatory
framework where wages are not controlled.
Researchers ; Students
http://hdl.handle.net/10993/12886
http://wwwfr.uni.lu/content/download/16901/214247/file/2008-09_On%20monopolistic%20competition%20and%20optimal%20product%20diversity_%20workers%20rents%20also%20matter.pdf

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