SFB 303 Discussion Paper No. A - 295
Author: Benassy, Jean-Pascal
Title: Monopolistic Competition
Abstract: The theory of monopolistic competition (and more generally all theories which endogenize price making
without an auctioneer) poses important and difficult conceptual problems. Our purpose in this paper is to review
a number of them. Of course, given the gigantic size of the literature on the subject, such a review can only be
partial. As in the original monopolistic competition contribution we shall mostly concentrate on models with a
generally large number of price setters, and indicate in the conclusion a number of alternative
paper is organized as follows: Section 2 briefly reviews early developments in imperfect competition prior to
Section 3 introduces a basic model and studies problems of existence of an equilibrium.
Section 4 discusses the issue of competitiveness of monopolistic competition. Section 5 introduces endogenous
product differentiation. Section 6 considers general equilibrium representations of monopolistic competition
Section 7 presents macroeconomic applications. Subsections at the end of each section indicate a list of further
Creation-Date: May 1990
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