Social Optimality in International Trade Under Monopolistic Competition

Bykadorov, Igor

doi:10.1007/978-3-030-33394-2_13

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2020

2023

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Cited by 2 publications

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“…In [18], we study questions similar to those from [14], not for market equilibrium, but for social optimality. Therefore, there is a natural assumption that the concepts of market equilibrium and social optimality, being concepts of a fundamentally "different" nature, have something in common from a "mathematical" point of view.…”

Section: Introductionmentioning

confidence: 99%

The Open Monopolistic Competition Models: Market Equilibrium and Social Optimality

Bykadorov

2023

Mathematics

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We study the monopolistic competition model of Dixit–Stiglitz–Krugman with additive separable utility and transport costs of “iceberg types”. The production costs are not necessary linear. We study two concepts: market equilibrium and social optimality. There are well-known facts in the closed economy under monopolistic competition: (1) “in market equilibrium, the elasticity of revenue equals the elasticity of total costs” and (2) “in social optimality, the elasticity of utility equals the elasticity of total costs”. Moreover, earlier Prof. Sergey Kokovin (HSE University, Russia) generated the idea that (3) “the search for equilibrium is equivalent to the problem of optimization, but revenue, not utility”. For the case of several countries, it turns out that facts (1) and (2) and prediction (3) remain mostly true.

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Section: Introductionmentioning

confidence: 99%