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Technology Choice and Monopolistic Competition

24 Pages Posted: 14 Jun 2000  

Walter Elberfeld

University of Cologne

Georg Götz

University of Giessen - Department of Economics

Date Written: October 25, 1999

Abstract

The purpose of this article is twofold. First, it deals with the question of technology choice in a framework where agents are 'small'. It shows that firms generically choose the same technology although different technologies are available. Our simple static model yields a non-monotonous relation between market size and the number of firms. Second, it re-examines the Dixit-Stiglitz model of monopolistic competition. We show that the comparative statics and welfare results from the often used CES case do not extend to the more general case of a variable elasticity of substitution (VES). While the comparative static results from the VES case are intuitive, the welfare analysis reveals some unappealing features of this approach.

Suggested Citation

Elberfeld, Walter and Götz, Georg, Technology Choice and Monopolistic Competition (October 25, 1999). Available at SSRN: https://ssrn.com/abstract=192050 or http://dx.doi.org/10.2139/ssrn.192050

Walter Elberfeld

University of Cologne ( email )

Albertus-Magnus-Platz
Staatswissenschaftliches Seminar
50931 Koeln
Germany
+49 221-470-4356 (Phone)
+49 221-470-5068 (Fax)

Georg Götz (Contact Author)

University of Giessen - Department of Economics ( email )

Licher Str. 62
Giessen, Hessen D-35394
Germany
+49 641 99 22050 (Phone)
+49 641 99 19867 (Fax)

HOME PAGE: http://wiwi.uni-giessen.de/home/goetz/

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