Quantifying the gap between equilibrium and optimum under monopolistic competition

Arbeitspapier

Equilibria and optima generally differ in imperfectly competitive markets. While this is well understood theoretically, it is unclear how large the welfare distortions are in the aggregate economy. Do they matter quantitatively? To answer this question, we develop a multi-sector monopolistic competition model with endogenous firm entry and selection, productivity, and markups. Using French and British data, we quantify the gap between the equilibrium and optimal allocations. In our preferred specification, inefficiencies in the labor allocation and entry between sectors, as well as inefficient selection and output per firm within sectors, generate welfare losses of about 6-10% of gdp.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Document de travail ; No. 2018-01

Klassifikation und Themen

• Klassifikation: Wirtschaft

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Behrens, Kristian ; Mion, Giordano ; Murata, Yasusada ; Suedekum, Jens
• Ereignis: Veröffentlichung
• (wer): Université du Québec à Montréal, École des sciences de la gestion (ESG UQAM), Département des sciences économiques
• (wo): Montréal
• (wann): 2018

Weitere Informationen

• Handle: http://hdl.handle.net/10419/234756
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ