Does more market competition lead to higher income and utility in the long run?

Stauvermann, Peter Josef; Kumar, Ronald Ravinesh

doi:10.1111/boer.12318

Cited by 7 publications

(14 citation statements)

References 70 publications

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“…It should be noted that the effect of increasing market concentration on the economic growth is ambigous and this confirms the results of some recent studies Stauvermann 2020, 2021) and Stauvermann and Kumar (2021).…”

Section: The Conclusionsupporting

confidence: 89%

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Imperfect Competition, Real Estate Prices and New Stylized Facts

Kumar

Stauvermann

2022

JRFM

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In this paper, we develop an overlapping generation model with imperfect competition and land to provide a theoretical foundation for some empirical observations made since the end of the 1970s. The problem is that these new “stylized facts” do not coincide with Kaldor’s stylized facts and unfortunately the standard growth models are not able to explain these new facts. By using our model, we are able to theoretically derive these new facts and to provide a theoretical foundation for them. In particular, increasing market concentration leads to a decline in the labor income share, to a decline in the capital income share, to a decline in the natural interest rate, to an increasing wealth to income ratio, and to an over-proportional increase in land prices in developed countries. The model developed for analysis has close similarity with the standard neoclassical overlapping generation model with endogenous growth and land. The main difference between the standard neoclassical and the model in this paper is the market structure. Instead of assuming perfectly competitive markets, we assume an oligopolistic market structure. This leads to the occurrence of pure profits for firms and, accordingly, the input factors are no longer paid their marginal products.

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Section: The Conclusionsupporting

confidence: 89%

“…We especially consider the influence of increasing market power on the price of real estate and housing rents. The model is built on the recent work of Stauvermann (2020, 2021), Kumar et al (2021) and Stauvermann and Kumar (2021). To consider the real estate sector, we combine these models with the model of Che et al (2021).…”

Section: Introductionmentioning

confidence: 99%

Imperfect Competition, Real Estate Prices and New Stylized Facts

Kumar

Stauvermann

2022

JRFM

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“…To obtain results closer to reality, it is necessary to refine and extend the model, for example by introducing asset price bubbles, as in Grossman and Yanagawa (1993), or to allow for international borrowing and lending, as proposed by Buiter (1981). Nevertheless, it should be noted that the outcomes coincide with Stauvermann and Kumar (2021) results of an OLG model with a competitive and an oligopolistic sector.…”

Section: Discussionmentioning

confidence: 96%

“…Recently, the nonexistence of economic rents and profits has been questioned in the empirical studies by Barkai (2020), Barkai and Benzell (2018), Philippon (2019), De Loecker et al (2020), andEggertsson et al (2021). Considering these outcomes, Stauvermann and Kumar (2021) and Stauvermann (2020, 2021) developed three growth models that account for economic profits by assuming oligopolistic competition instead of perfect competition. The models proposed by Stauvermann and Kumar (2021) and Stauvermann (2020, 2021) have close resemblance, in terms of the market structure comparability, with the static model proposed by Mankiw (1988).…”

Section: Introductionmentioning

confidence: 99%

“…Considering these outcomes, Stauvermann and Kumar (2021) and Stauvermann (2020, 2021) developed three growth models that account for economic profits by assuming oligopolistic competition instead of perfect competition. The models proposed by Stauvermann and Kumar (2021) and Stauvermann (2020, 2021) have close resemblance, in terms of the market structure comparability, with the static model proposed by Mankiw (1988). The advantage of the framework proposed by Kumar and Stauvermann is its tractability and comparability with the usual growth models.…”

Section: Introductionmentioning

confidence: 99%

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The Capitalist Spirit and Endogenous Growth

Kumar

Stauvermann

Wernitz

2022

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The aim of the study is to investigate the influence of the capitalist spirit in conjunction with the distribution of income on economic growth. The capitalist spirit is represented by the fact that savings rates increase with increasing relative income. We extend an endogenous AK growth model in an overlapping generational framework by implementing imperfect competition and Cournot competition. Using this model, we investigate the influence of profits on the intra- and inter-generational distributions of income and economic growth. While increasing incomes lead to a more unequal intra-generational distribution and to a redistribution of income from the old to the young generation, the impact on economic growth is in general ambiguous, although under specific assumptions it becomes positive. Furthermore, the model shows that increasing market power of firms is associated with declining labor and capital shares, declining interest rates, and an increased wealth-to-income ratio.

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G: Principles and Methods

2022

World Banking Abstracts

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The Malaysian Government's budget has long been under strain due to large allocations for fuel subsidies. This paper assesses the impact of fuel subsidy removal on Malaysia's sectoral output and employment. Using a computable general equilibrium (CGE) model, overall, findings show that fuel subsidy removal increases fuel prices so that input costs also increase, indicating a decline in output and employment in fuel product industries and among manufacturing subsectors. However, negative impacts such as increased production costs would be more than offset by the positive impacts of revenue reallocation policies such as sales tax reduction. This study provides useful information for policy makers in evaluating or updating current subsidy policies to reduce economic losses. ( 7figures, 7 tables, references) 1293/39 Growth expectations and the dynamics of firm entry Kharroubi, E. Bank for International Settlements Working Papers No. 1036 (August 2022), pp. 1-53The article investigates the aggregate conditions that affect the dynamics of firm entry. Sectoral data on firm entry and exit for the main economies of the Euro Area over 2009-2019 is used. Findings show that growth expectations are the key driver for firm entry. More firms are created in response to past exits only when aggregate GDP growth is forecasted to be strong. Similarly, periods of low entry and high exit can be followed by strong entry subsequently, when the economy is expected to grow strongly. The findings are robust to the inclusion of several controls, such as the quality of insolvency proceedings, firms' ability to obtain credit or the presence of barriers to entry. (6 figures, 14 tables, references) 1294/39 Online sales, home delivery, and the platform economy

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Does more market competition lead to higher income and utility in the long run?

Cited by 7 publications

References 70 publications

Imperfect Competition, Real Estate Prices and New Stylized Facts

Imperfect Competition, Real Estate Prices and New Stylized Facts

The Capitalist Spirit and Endogenous Growth

G: Principles and Methods

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