Optimal choice of product scope for multiproduct firms under monopolistic competition:
In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibali...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13703 |
| Online-Zugang: | kostenfrei |
| Zusammenfassung: | In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibalizing" their own sales. With identical costs across firms, opening trade leads to fewer firms surviving in each country but more varieties produced by each of those firms. With heterogeneous costs, the number of firms surviving in equilibrium is quite insensitive to the market size. When trade is opened, more firms initially enter, but the larger market size reduces the cannibalization effect and expands the optimal scope of products. As a result, the less efficient firms exit, and the larger market is accommodated by more efficient firms that produce more varieties per firm on average. |
| Beschreibung: | 34 S. 22 cm |
Internformat
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| 245 | 1 | 0 | |a Optimal choice of product scope for multiproduct firms under monopolistic competition |c Robert Feenstra ; Hong Ma |
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| 490 | 1 | |a Working paper series / National Bureau of Economic Research |v 13703 | |
| 520 | |a In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibalizing" their own sales. With identical costs across firms, opening trade leads to fewer firms surviving in each country but more varieties produced by each of those firms. With heterogeneous costs, the number of firms surviving in equilibrium is quite insensitive to the market size. When trade is opened, more firms initially enter, but the larger market size reduces the cannibalization effect and expands the optimal scope of products. As a result, the less efficient firms exit, and the larger market is accommodated by more efficient firms that produce more varieties per firm on average. | ||
| 700 | 1 | |a Ma, Hongyan |e Verfasser |0 (DE-588)132327295 |4 aut | |
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Datensatz im Suchindex
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| id | DE-604.BV023593598 |
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| index_date | 2024-07-02T22:41:32Z |
| indexdate | 2024-07-09T21:25:15Z |
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| spelling | Feenstra, Robert C. 1956- Verfasser (DE-588)124078958 aut Optimal choice of product scope for multiproduct firms under monopolistic competition Robert Feenstra ; Hong Ma Cambridge, Mass. National Bureau of Economic Research 2007 34 S. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13703 In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of "cannibalizing" their own sales. With identical costs across firms, opening trade leads to fewer firms surviving in each country but more varieties produced by each of those firms. With heterogeneous costs, the number of firms surviving in equilibrium is quite insensitive to the market size. When trade is opened, more firms initially enter, but the larger market size reduces the cannibalization effect and expands the optimal scope of products. As a result, the less efficient firms exit, and the larger market is accommodated by more efficient firms that produce more varieties per firm on average. Ma, Hongyan Verfasser (DE-588)132327295 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13703 (DE-604)BV002801238 13703 http://papers.nber.org/papers/w13703.pdf kostenfrei Volltext |
| spellingShingle | Feenstra, Robert C. 1956- Ma, Hongyan Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title | Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title_auth | Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title_exact_search | Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title_exact_search_txtP | Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title_full | Optimal choice of product scope for multiproduct firms under monopolistic competition Robert Feenstra ; Hong Ma |
| title_fullStr | Optimal choice of product scope for multiproduct firms under monopolistic competition Robert Feenstra ; Hong Ma |
| title_full_unstemmed | Optimal choice of product scope for multiproduct firms under monopolistic competition Robert Feenstra ; Hong Ma |
| title_short | Optimal choice of product scope for multiproduct firms under monopolistic competition |
| title_sort | optimal choice of product scope for multiproduct firms under monopolistic competition |
| url | http://papers.nber.org/papers/w13703.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT feenstrarobertc optimalchoiceofproductscopeformultiproductfirmsundermonopolisticcompetition AT mahongyan optimalchoiceofproductscopeformultiproductfirmsundermonopolisticcompetition |