Monopolistic competition: Critical evaluation the theory of monopolistic competition with specific reference to the seminal 1977 paper by Dixit and Stiglitz

Josheski, Dushko and Koteski, Cane and Lazarov, Darko (2011) Monopolistic competition: Critical evaluation the theory of monopolistic competition with specific reference to the seminal 1977 paper by Dixit and Stiglitz. Munich Personal RePEc Archive. p. 19.

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Abstract

This paper revisits the D-S (Dixit-Stiglitz) model. It’s a simple general monopolistic model with n monopolistic goods, and a numeraire good Labour ( ); aggregation for all goods in the economy. We have considered in our paper constant elasticity of substitution case(CES).On the supply side, the assumption is that the labour is perfectly mobile factor of production across the sectors, so as a result in our model there is single wage rate which we denote as in the other sectors than monopolistic there is constant returns to scale and we can specify the production function: The Dixit-Stiglitz model of monopolistic competition works only when is large; from the functions of the productions best when one applies linear production function. Under increasing returns to scale monopolistic competition will lead to a greater degree of product differentiation than it is socially optimal.

Item Type: Article
Subjects: Social Sciences > Economics and business
Social Sciences > Social and economic geography
Divisions: Faculty of Tourism and Business Logistics
Depositing User: Cane Koteski
Date Deposited: 21 Nov 2012 09:24
Last Modified: 21 Oct 2014 13:39
URI: http://eprints.ugd.edu.mk/id/eprint/1536

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