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Firm heterogeneity in competition among the big and the small

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  • Kenji Fujiwara

Abstract

This paper makes comparative statics in a model in which oligopolistic and monopolistically competitive firms that are heterogeneous in productivity compete. We demonstrate that (i) entry of oligopolistic incumbents, (ii) reduction in entry cost of monopolistically competitive entrants, and (iii) market size expansion improve the average productivity in the whole economy. However, (i) and (iii) raise welfare, but (ii) may lower welfare because of the presence of oligopolistic firms.

Suggested Citation

  • Kenji Fujiwara, 2024. "Firm heterogeneity in competition among the big and the small," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 147-166, January.
    • Handle: RePEc:bla:buecrs:v:76:y:2024:i:1:p:147-166
    DOI: 10.1111/boer.12418
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