CORE Discussion Paper No. 2005/16
10 Pages Posted: 8 Feb 2006
Date Written: March 2005
In the Dixit-Stiglitz model of monopolistic competition, entry of firms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that the cost structure and workers's rents can also explain excess entry.
Suggested Citation: Suggested Citation
Picard, Pierre M. and Toulemonde, Eric, On Monopolistic Competition and Optimal Product Diversity: A Comment on Cost Structure and Workers' Rents (March 2005). CORE Discussion Paper No. 2005/16. Available at SSRN: https://ssrn.com/abstract=880398 or http://dx.doi.org/10.2139/ssrn.880398