Market Size, Technology Choice, and Market Structure

Posted: 10 Oct 2003

See all articles by Walter Elberfeld

Walter Elberfeld

University of Cologne

Georg Götz

University of Giessen - Department of Economics

Abstract

We introduce technology choice into a model of monopolistic competition and analyze the structural effects of changes in market size. A larger market leads to the adoption of a large-scale technology. If a technology switch occurs, the number of firms decreases, and a rationalizing effect arises: individual and aggregate output increases; prices fall. This need not benefit consumers since a technology switch is associated with a decrease in product variety.

Suggested Citation

Elberfeld, Walter and Götz, Georg, Market Size, Technology Choice, and Market Structure. German Economic Review, Vol. 3, pp. 25-41, 2002. Available at SSRN: https://ssrn.com/abstract=308982

Walter Elberfeld (Contact Author)

University of Cologne ( email )

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

Georg Götz

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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