General equilibrium models of monopolistic competition: A new approach

Behrens, Kristian; Murata, Yoshinori

doi:10.1016/j.jet.2006.10.001

Cited by 169 publications

(146 citation statements)

References 7 publications

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“…(7) stands for the profit margin effect, weighted by the productivity term f. In standard models with constant demand elasticity, this effect would vanish since e MR2;p2 1. With variable demand elasti city as considered, for example, in Zhelobodko et al (2012) or Behrens and Murata (2007), however, this term can become either positive or negative, depending on whether the price increase leads to a higher or lower profit margin (mark up) for manufacturing firms.…”

Section: Stolper Samuelson Effectmentioning

confidence: 99%

De-industrialization and entrepreneurship under monopolistic competition

Schweinberger

Suedekum

2015

Oxf. Econ. Pap.

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This article offers a new mechanism to explain de-industrialization in response to a price increase of the manufactured good. In our trade model, one sector (agriculture) is perfectly competitive whilst the other (manufacturing) is monopolistically competitive. Both industries use skilled and unskilled labour as inputs. Entry into manufacturing requires a fixed cost in terms of skilled labour only. A rise in the market price for the differentiated goods raises both marginal revenue and the price of skilled labour, which affects the marginal cost of production and the entry cost. When short-run profits increase so that new manufacturing firms enter, fewer skilled workers are available for production purposes. This in turn may then lead to a decline in total manufacturing output. Our theoretical mechanism is jointly consistent with recent empirical observations on premature de-industrialization characterizing several Latin American and Asian countries and productive diversification as observed in various developing economies.

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Section: Stolper Samuelson Effectmentioning

confidence: 99%

De-industrialization and entrepreneurship under monopolistic competition

Schweinberger

Suedekum

2015

Oxf. Econ. Pap.

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“…Since we do not have/use any production data, to keep the model as simple as possible, we only focus on the trade implications of having constant absolute risk aversion (CARA) and constant relative risk aversion form (CRRA) utility functions, which correspond to variable and constant markups, respectively. 5 …”

Section: Modelmentioning

confidence: 99%

Pass-through of trade costs to U.S. import prices

Yilmazkuday

2015

Rev World Econ

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This paper measures the pass-through of trade costs into U.S. import prices by using actual data on duties/tari¤s and freight-related costs. The key innovation is to decompose the indirect e¤ects of trade costs (on prices) into the e¤ects on markups, quality and productivity while measuring/interpreting the pass-through of trade costs into welfare. Robust to the consideration of variable versus constant markups, there is evidence for incomplete pass-through, mostly due to the negative indirect e¤ects of trade costs on marginal costs, suggesting that lower trade costs are associated with imports that have higher marginal costs; markups are a¤ected relatively less. When the e¤ects of trade costs on marginal costs are further decomposed into their components, the positive contribution of quality dominates in all cases, followed by the negative e¤ects of productivity, suggesting that lower trade costs are associated with higher-quality imports that have been produced with lower productivity. JEL Classi…cation F12, F13, F14

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“…To illustrate our results in a simple setting, we first obtain the second-best HGT in a NEG-type model where the utility function is additively separable with respect to varieties as in Dixit and Stiglitz (1977), although we follow Behrens and Murata (2007) and Zhelobodko et al (2012) and do not restrict the functional form of the subutility a priori to the CES type. We also incorporate a property tax on housing and a pure local public good in each city.…”

Section: Introductionmentioning

confidence: 99%

The Henry George Theorem in a second-best world

Behrens

Kanemoto

Murata

2015

Journal of Urban Economics

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The Henry George Theorem (HGT) states that, in first-best economies, the fiscal surplus of a city government that finances the Pigouvian subsidies for agglomeration externalities and the costs of local public goods by a 100% tax on land is zero at optimal city sizes. We extend the HGT to distorted economies where product differentiation and increasing returns are the sources of agglomeration economies and city governments levy property taxes. Without relying on specific functional forms, we derive a second-best HGT that relates the fiscal surplus to the excess burden expressed as an extended Harberger formula.

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General equilibrium models of monopolistic competition: A new approach

Cited by 169 publications

References 7 publications

De-industrialization and entrepreneurship under monopolistic competition

De-industrialization and entrepreneurship under monopolistic competition

Pass-through of trade costs to U.S. import prices

The Henry George Theorem in a second-best world

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