Product-market integration with endogenous firm heterogeneity
- Resource Type
- Authors
- Ivan Ledezma
- Source
- Oxford Economic Papers
Oxford Economic Papers, Oxford University Press (OUP), 2021, ⟨10.1093/oep/gpab001⟩
- Subject
- Economics and Econometrics
Product market
General equilibrium theory
05 social sciences
[SHS.ECO]Humanities and Social Sciences/Economics and Finance
Economies of scale
Microeconomics
Oligopoly
Globalization
Market structure
8. Economic growth
0502 economics and business
Economics
Spite
medicine
050207 economics
Free entry
medicine.symptom
050205 econometrics
- Language
- English
- ISSN
- 0030-7653
1464-3812
This paper proposes a general equilibrium oligopoly model in which firm heterogeneity is endogenously reproduced through technology adoption decisions. The model can explain persistent oligopolistic market structures and prices in spite of free entry and market enlargement. Moreover, strong selection might deteriorate average cost efficiency due to strategic interactions. Integrating identical countries can be welfare-improving. But distributional issues and tensions between welfare and scale economies may arise. The theory can be motivated by recent evidence on oligopolistic market structures resisting globalization forces.