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:	https://eprints.ugd.edu.mk/id/eprint/1536

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