Gains from trade and efficiency under monopolistic competition : a variable elasticity case ∗

@inproceedings{Behrens2006GainsFT,
  title={Gains from trade and efficiency under monopolistic competition : a variable elasticity case ∗},
  author={Kristian Behrens and Yasusada Murata},
  year={2006}
}
We present a general equilibrium model of monopolistic competition with variable demand elasticities and investigate the impact of free trade on welfare and efficiency. First, contrary to the constant elasticity case, in which all gains from trade are due to increasing product diversity, our model features gains from pro-competitive effects. Second, we show that the market outcome is not constrained efficient because too many firms operate at an inefficiently small scale. Last, we prove that… CONTINUE READING

From This Paper

Topics from this paper.
8 Citations
23 References
Similar Papers

References

Publications referenced by this paper.
Showing 1-10 of 23 references

A functional separability approach to monopolistic competition: the Dixit-Stiglitz model reconsidered, KIER Discussion Paper #COE21/87, Kyoto University

  • K. Behrens, Y. Murata
  • 2005
Highly Influential
3 Excerpts

Advanced International Trade: Theory and Evidence

  • R. E. Feenstra
  • 2003
Highly Influential
4 Excerpts

Some reflections on theories and applications of monopolistic competition

  • A. K. Dixit
  • 2004

Similar Papers

Loading similar papers…