Colciago, Andrea and Etro, Federico (2007): Real Business Cycles with Cournot Competition and Endogenous Entry.
Download (282Kb) | Preview
We introduce Cournot competition and endogenous entry in an otherwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of business creation. Then, we develop a model à la Ramsey describing the dynamic interaction of consumption and business creation. Our models are able to explain why markups vary countercylically and profits are procyclical. The analysis of permanent and temporary technology and preference shocks and of the second moments suggests that our model can outperform the Real Business Cycle framework in many dimensions.
|Item Type:||MPRA Paper|
|Original Title:||Real Business Cycles with Cournot Competition and Endogenous Entry|
|Keywords:||Business Cycle; Cournot Competition; Endogenous Entry|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
|Depositing User:||Andrea Colciago|
|Date Deposited:||25. Feb 2008 16:18|
|Last Modified:||14. Feb 2013 08:12|
Baxter Marianne and King Robert, 1992, Productive externality and cyclical volatility, Working paper 245, University of Rochester Bilbiie, Florin, Fabio Ghironi and Marc Melitz, 2007a, Monetary Policy and Business Cycles with Endogenous Entry and Product Variety, NBER Macroeconomic Annual, in press Bilbiie, Florin, Fabio Ghironi and Marc Melitz, 2007b, Endogenous Entry,Product Variety, and Business Cycles, NBER wp 13646 Blanchard, Olivier and Nobuhiro Kiyotaki, 1987, Monopolistic Competition and the E¤ects of Aggregate Demand, The American Economic Review, 77, 4, 647-66 Chatterjee, Satyajit and Russell W. Cooper, 1993,Entry and Exit, Product Variety and the Business Cycle, NBER Working Paper No. 4562 Devereux, Michael, Allen Head and Beverly Lapham, 1996, Aggregate Fluctuations with Increasing Returns to Specialization and Scale, Journal of Economic Dynamics and Control, 20, 627-56 Etro, Federico, 2004, Innovation by Leaders, The Economic Journal, 114,4, 495, 281-303 Etro, Federico, 2007a, Competition, Innovation, and Antitrust, New York and Berlin, Springer Etro, Federico, 2007b, EndogenousMarket Structures and Macroeconomic Theory, Tijdschrift voor Economie en Management, 52, 4, 543-66 Etro, Federico, 2008a, Growth Leaders, Journal of Macroeconomics, in press Etro, Federico, 2008b, Stackelberg Competition with Endogenous Entry, The Economic Journal, in press Etro, Federico and Colciago, Andrea, 2007, Endogenous Market Structures and the Business Cycle, University of Milan, Bicocca, WP 126 Jaimovich, Nir, 2007, Firm Dynamics and Markup Variations: Implications for Multiple Equilibria and Endogenous Economic Fluctuations , Journal of Economic Theory, 137, 1, 300-325 Jaimovich, Nir and Max Floetotto, 2008, Firm Dynamics, Markup Variations, and the Business Cycle, mimeo, Stanford University King, Robert and Sergio Rebelo, 2000, Resuscitating Real Business Cycles, Chapter 14 in Handbook of Macroeconomics, J. B. Taylor & M.Woodford Ed., Elsevier, Volume 1, 927-1007 Kydland, Finn and Edward Prescott, 1982, Time to Build and Aggregate Fluctuations, Econometrica, 50, 6, 1345-70 Lewis, Vivien, 2007, Business Cycle Evidence on Firm Entry, mimeo, Deutsche Bundesbank Portier, Franck, 1995, Business Formation and Cyclical Markups in the French Business Cycle, Annales d�Economie et de Statistiques, 37/38, pp.411-40 Ramsey, Frank, 1928, A Mathematical Theory of Saving, The Economic Journal, 38, 152, 543-59 Rotemberg, Julio and Michael Woodford, 2000, The Cyclical Behavior of Prices and Costs, Ch. 16 in Handbook of Macroeconomics, J. B. Taylor & M. Woodford Ed., Elsevier, Volume 1, 1051-135 Solow Robert, 1956, A Contribution to the Theory of Economic Growth, Quarterly Journal of Economics, 70, 65-940 Wen, Yi, 2006, Demand Shocks and Economic Fluctuations, Economics Letters, March 2006, 90, 3, 373-83