scholarly journals Environmental offsets and production externalities under monopolistic competition

2022 ◽  
Author(s):  
Masatoshi Yoshida ◽  
Stephen J. Turnbull ◽  
Mitsuru Ota
Keyword(s):  
Monopolistic Competition ◽  
Production Externalities

Macroeconomic (in)stability and endogenous market structure with productive government expenditure

2017 ◽  
Vol 21 (2) ◽  
Author(s):  
Cheng-Wei Chang ◽  
Ching-Chong Lai
Keyword(s):  
Government Spending ◽  
Monopolistic Competition ◽  
Government Expenditure ◽  
Returns To Scale ◽  
Production Externalities ◽  
Congestion Effect ◽  
Local Indeterminacy ◽  
Endogenous Market Structure ◽  
Productive Government Spending ◽  
Productive Government Expenditure

AbstractWe consider the congestion effect of productive government spending in a monopolistic competition model with endogenous entry, and analyze the possibility of local indeterminacy. Some main findings emerge from the analysis. First, the indeterminacy condition is independent of the monopoly power. Second, productive government expenditure can be a source of local indeterminacy, while a higher degree of public goods congestion lessens the beneficial effect of productive government expenditure, and therefore reduces the possibility of indeterminacy. Third, a higher degree of internal returns to scale is associated with a lower possibility for the emergence of indeterminacy when production externalities are present.

Disagreements on the Market

2021 ◽  
pp. 15-37
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Financial Markets ◽  
Market Failure ◽  
Monopolistic Competition ◽  
Market Equilibrium ◽  
Market Mechanism ◽  
Collective Decision Making ◽  
Publicly Traded ◽  
Production Externalities ◽  
Incomplete Financial Markets ◽  
Imperfectly Competitive

A general equilibrium model of publicly traded firms is provided in the case of a perfect market; it shows how, at the market equilibrium, shareholders agree that profits should be maximized, and about how to compute profits. Hence, they all agree on the objectives of the firms. Next three different contexts of market failure are introduced: incomplete financial markets, production externalities, and monopolistic competition. By use of a common tool (value vectors), it is shown how the market mechanism fails to generate full alignment between shareholders: when facing production externalities or monopolistic competition, shareholders do not necessarily agree that profit should be maximized; when facing incomplete financial markets, shareholders disagree on how to compute profits. In a nutshell: trading on the market generates agreement, but if trading is incomplete or imperfectly competitive then agreement is only partial, and the residual disagreements give rise to problems for collective decision-making.

SHOULD THE PRIVATE SECTOR PROVIDE PUBLIC CAPITAL?

2007 ◽  
Vol 11 (3) ◽  
pp. 318-346
Author(s):  
SANTANU CHATTERJEE
Keyword(s):  
Open Economy ◽  
Public Capital ◽  
Borrowing Constraints ◽  
International Capital ◽  
Standard Assumption ◽  
Production Externalities ◽  
International Capital Markets ◽  
Private Provision ◽  
Large Production ◽  
Government Provision

The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard assumption in the literature. Even with an efficient government, the relative costs and benefits of government and private provision depend crucially on the economy's underlying structural conditions and borrowing constraints in international capital markets. Countries with limited substitution possibilities and large production externalities may benefit from governments encouraging private provision of public capital through targeted investment subsidies. By contrast, countries with flexible substitution possibilities and relatively smaller externalities may benefit either from governments directly providing public capital or from regulation of private providers. The transitional dynamics also are shown to depend on the underlying elasticity of substitution and the size of the production externality.

Relation-Based Governance and Competition

2017 ◽  
Author(s):  
Avinash Dixit
Keyword(s):  
Spatial Model ◽  
Monopolistic Competition ◽  
Perfect Competition ◽  
Alternative Methods ◽  
Fixed Costs ◽  
Relational Governance ◽  
Dead Weight ◽  
Small Communities ◽  
Information And Communication ◽  
Size Of Firms

If formal institutions of contract governance are absent or ineffective, traders try to substitute relational governance based on norms and sanctions. However, these alternatives need good information and communication concerning members’ actions; that works well only in relatively small communities. If there are fixed costs, the market has too few firms for perfect competition. The optimum must be a second best, balancing the effectiveness of contract governance and dead-weight loss of monopoly. This chapter explores this idea using a spatial model with monopolistic competition. It is found that relational governance constrains the size of firms and can cause inefficiently excessive entry, beyond the excess that already occurs in a spatial model without governance problems. Effects of alternative methods of improving governance to ameliorate this inefficiency are explored.

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