Abstract

We provide novel insights on the decentralization of optimal outcomes under monopolistic competition with non-separable utility, variable demand elasticity and endogenous firm heterogeneity. Relative to the uncostrained optimum, equilibrium firm selection is too weak, average firm size is too small, low-cost firms are too small and high-cost firms are too large. The unconstrained optimum can be decentralized through differentiated production subsidies to producers financed through lump-sum taxes on entrants and consumers. When differentiated subsidies and transfers from entrants are not viable, the constrained optimum can be decentralized through a common production subsidy financed by a lump-sum tax on consumers.

Autore Pugliese

• Nocco Antonella

Tutti gli autori

• A. Nocco , G. I. P. Ottaviano , M. Salto

Titolo volume/Rivista

THE AMERICAN ECONOMIC REVIEW

Anno di pubblicazione

2014

ISSN

0002-8282

ISBN

Non Disponibile

Numero di citazioni Wos

9

Ultimo Aggiornamento Citazioni

27/04/2018

Numero di citazioni Scopus

9

Ultimo Aggiornamento Citazioni

26/04/2018

Settori ERC

Non Disponibile

Codici ASJC

Non Disponibile