We characterize endogenous market structures under Bertrand and Cournot competition in a DSGE model. Short run markups vary countercyclically because of the impact of entry on competition. Long run markups are decreasing in the discount factor and in productivity, and increasing in the exit rate and in the entry costs. Dynamic inefficiency can emerge due to excessive entry under Cournot competition. Positive temporary shocks attract entry, which strengthens competition so as to temporary reduce the markups and increase real wages: this competition effect creates an intertemporal substitution effect which boosts consumption and employment. Endogenous market structures improve the ability of a flexible prices model in matching impulse response functions and second moments for US data
Colciago, A., & Etro, F. (2010). Endogenous Market Strucure and the Business Cycle. ECONOMIC JOURNAL, 120(549), 1201-1233 [10.1111/j.1468-0297.2010.02384.x].
Citazione: | Colciago, A., & Etro, F. (2010). Endogenous Market Strucure and the Business Cycle. ECONOMIC JOURNAL, 120(549), 1201-1233 [10.1111/j.1468-0297.2010.02384.x]. | |
Tipo: | Articolo in rivista - Articolo scientifico | |
Carattere della pubblicazione: | Scientifica | |
Titolo: | Endogenous Market Strucure and the Business Cycle | |
Autori: | Colciago, A; Etro, F | |
Autori: | ||
Data di pubblicazione: | 2010 | |
Lingua: | English | |
Rivista: | ECONOMIC JOURNAL | |
Sostituisce: | http://docs.google.com/fileview?id=0B3O_tvevW_ocZmFmZjJjZWUtNmE4MC00NGY3LWEzYmMtN2ZjYzg3NTI0NzIy&hl=en | |
Digital Object Identifier (DOI): | http://dx.doi.org/10.1111/j.1468-0297.2010.02384.x | |
Appare nelle tipologie: | 01 - Articolo su rivista |