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- hal: hal-01066187
- SCIENCESPO: 2441/7348
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Mots-clés
new economic geography variable mark-ups monopolistic competition flexible varieties aggregator D - Microeconomics/D.D4 - Market Structure, Pricing, and Design/D.D4.D43 - Oligopoly and Other Forms of Market Imperfection F - International Economics/F.F1 - Trade/F.F1.F12 - Models of Trade with Imperfect Competition and Scale Economies • Fragmentation L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance/L.L1.L12 - Monopoly • Monopolization Strategies R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R1 - General Regional Economics/R.R1.R12 - Size and Spatial Distributions of Regional Economic Activity R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R1 - General Regional Economics/R.R1.R13 - General Equilibrium and Welfare Economic Analysis of Regional EconomiesSujets proches
World economics Geography, Economic Pattern ModelCiter ce document
Sylvain Barde, « A Generalized Variable Elasticity of Substitution Model of New Economic Geography », Archive ouverte de Sciences Po (SPIRE), ID : 10670/1.54zejz
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Résumé
This paper analyses the methodology developed by Behrens and Murata (2007) to introduce variable mark-ups into models of monopolistic competition. Their risk- aversion explanation to the presence of ¯xed mark-ups in the Dixit and Stiglitz (1977) model is validated; however, we show that their constant absolute risk aversion solution ignores existing mechanisms found in the new Keynesian literature. From these we develop a model of new economic geography with a variable elasticity of substitution and variable mark-ups consistent with Behrens and Murata (2007). However, we argue that from both a theoretical and empirical perspective this new Keynesian approach is preferable to the solution of Behrens and Murata (2007).