Monopolistic Competition and Optimum Product Diversity: Comment.
In their article "Monopolistic Competition and Optimum Product Diversity," economists Avinash Dixit and Joseph Stiglitz studied whether under monopolistic competition there will be too many or too few products. They conclude that if the demand for each individual product in the industry is of consta...
| Publicado en: | American Economic Review Vol. 69; no. 5; pp. 957 - 961 |
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| Formato: | Artículo |
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American Economic Association
Dec79
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=4499066&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 4499066 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00028282 AER jtl: American Economic Review issn: 00028282 maglogo: N pubinfo: dt: Dec79 vid: 69 iid: 5 pid: 22 pub: American Economic Association artinfo: ui: 4499066 ppf: 957 ppct: 4 formats: tig: atl: Monopolistic Competition and Optimum Product Diversity: Comment. aug: au: Pettengill, John S. affil: Assistant Professor of Economics, University of Virginia. su: Monopolistic competition Demand function Diversification in industry Competition Elasticity (Economics) Economic demand Manufactured products sug: subj: Monopolistic competition Demand function Diversification in industry Competition Elasticity (Economics) Economic demand Manufactured products ab: In their article "Monopolistic Competition and Optimum Product Diversity," economists Avinash Dixit and Joseph Stiglitz studied whether under monopolistic competition there will be too many or too few products. They conclude that if the demand for each individual product in the industry is of constant elasticity, then the monopolistic competition equilibrium will have the optimum number of products, given the constraint that each firm must at least break even. Then they go on to study the case of variable-elasticity product demand curves. They conclude that there is no necessary relation between the elasticity of the product demand curves and optimum product diversity. But, they conclude that for an important family of utility functions, if the elasticity of demand falls as the scale of output in each firm rises, then monopolistic competition will lead to fewer than the optimal number of firms/products. This result is false. In fact, it is fairly easy to show that, within their model, if the elasticity of demand for an individual firm's product falls as the scale of output increases, then monopolistic competition will lead to too many products. Under Dixit and Stiglitz's framework, each consumer consumes a small proportion of each product on the market. It is hard to think of any market where this is a plausible assumption. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1979 holdings: @attributes: islocal: N |
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