Hostname: page-component-5c6d5d7d68-qks25 Total loading time: 0 Render date: 2024-08-17T00:32:44.389Z Has data issue: false hasContentIssue false
  • English
  • Français

The impact of macroeconomic policies in an oligopolistic economy with entry

Published online by Cambridge University Press:  17 August 2016

Dick. Damania  and
Peter Summers
Dick. Damania
Affiliation:
Flinders University of South Australia
Peter Summers
Affiliation:
University of Melbourne
Get access

Summary

This paper examines the impact macroeconomic policies in a system where the product market is modelled as an oligopolistic supergame in which potential entrants incur sunk entry costs. It is shown that policies which affect the interest rate, influence both the degree of competition in the industry and the structure of the industry. Moreover, it is demonstrated that when sunk entry costs are introduced in to the model firms respond in an asymmetric manner to policy changes. These results suggest that the economy may exhibit hysteresis.

Résumé

Résumé

Ce papier étudie l'impact de politiques macroeconomique dans un système où le marché des produits est modèlisé comme un jeu oligopolistique dans lequel les entrants potentiel encourent des coûts d'entrée. Il est montré que des politiques qui affectent le taux d'intérêt, influencent le degré de concurrence et la structure de l'industrie. De plus, il est démontré que quand les coûts d'entrée sont introduits dans le modèle, les firmes répondent de manière asymmetrique aux changements de politique. Ces résultats suggèrent que l'économie peut avoire de l'hysterese.

Keywords

D43E63D43E63
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 63 , Issue 3 , 1997 , pp. 225 - 244
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1997 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(*)

The authors acknowledge with gratitude the helpful comments of two anonymous referees. The usual disclaimer applies.

References

REFERENCES

Bonanno, G. [1990], General equilibrium theory with imperfect competition, Journal of Economic Surveys, 4(4), pp. 297–328.Google Scholar
Damania, D and Madsen, J. [1995], Monetary policy and macroeconomic equilibrium in an oligopolistic economy Journal of Macroeconomics, 17(4), pp. 651–666.Google Scholar
Dixon, H. [1987], A simple model of monopolistic competition with Walrasian features, Oxford Economic Papers, 39(1), pp. 134–160.Google Scholar
Dixon, H and Rankin, N. [1994], Imperfect competition and macroeconomics: A survey, Oxford Economic Papers, 46(2), pp. 171–199.Google Scholar
Friedman, J.W. [1989], Game Theory with Applications in Economics, London, Oxford University Press.Google Scholar
Hart, O.D. [1982], A model of imperfect competition with Keynesian features, Quarterly Journal of Economics, 97(1), pp. 134–160.Google Scholar
Macleod, W.B, Norman, G., and Thisse, J. [1987], Competition, tacit collusion and free entry, Economic Journal, 97(1), pp. 189–198.Google Scholar
Mankiw, N.G. [1988], Imperfect competition and the Keynesian cross, Economic Letters, 26(1), pp. 7–13.Google Scholar
Molana, H. and Moutos, T. [1992] A note on taxation, imperfect competition and the balanced budget multiplier, Oxford Economic Papers, 38(1) pp. 69–74.Google Scholar
Rotemberg, J. and Woodford, M. [1992], Oligopolistic pricing and the effects of aggregate demand on economic activity Journal of Political Economy, 100(6), pp. 1153–1207.Google Scholar
Sargent, T.J. [1979], Macroeconomic Theory, London, Academic Press.Google Scholar
Tirole, J. [1990], The Theory of Industrial Organisation, New York, MIT Press.Google Scholar