| 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.  [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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