Monopolistic Competition and Product Diversity: Review and Extension

32 Pages Posted: 4 Oct 2012

See all articles by Winston W. Chang

Winston W. Chang

University at Buffalo - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2012

Abstract

The modeling of monopolistic competition has contributed to rapid developments in numerous fields of economics, notably macroeconomics, international trade, industrial organization, economic growth and economic geography. This paper provides a systematic review and some extensions of various path‐breaking models of monopolistic competition and their subsequent developments, including the works of Spence, Dixit and Stiglitz that are based on the ‘love‐of‐variety’ approach, the works of Lancaster that are based on the ‘love‐of‐characteristic’ approach, and the large‐group monopolistic competition models of Hart, among others. The paper also examines the properties of some utility functions frequently used in the literature on models of monopolistic competition. Perhaps owing to the complexity of these models, the literature lacks a broad and systematic coverage of this essential subject. The paper aims to help fill the gap.

Keywords: Love‐of‐variety and love‐of‐characteristic models, Monopolistic competition, Product diversity

Suggested Citation

Chang, Winston W., Monopolistic Competition and Product Diversity: Review and Extension (December 2012). Journal of Economic Surveys, Vol. 26, Issue 5, pp. 879-910, 2012, Available at SSRN: https://ssrn.com/abstract=2156764 or http://dx.doi.org/10.1111/j.1467-6419.2011.00682.x

Winston W. Chang (Contact Author)

University at Buffalo - Department of Economics ( email )

453 Fronczak Hall
Department of Economics, SUNY at Buffalo
Buffalo, NY 14260
United States
716-645-8671 (Phone)
716-645-2127 (Fax)

HOME PAGE: http://arts-sciences.buffalo.edu/economics/faculty/faculty-directory/chang.html

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