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Business cycle in an oligopolistic economy with entry and exit

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  • Mazzoli, Marco
  • Lombardini, Simone

Abstract

In this paper we introduce a microfounded macromodel with endogenous market structure, where macroeconomic fluctuations may be determined by firms’ strategic interactions, entry and exit. All the agents have the same preferences but may differ in their budget constraints and change their social status according to idiosyncratic stochastic shocks that trigger entry, while exit is caused by firms’ bankruptcies. Our numerical simulations show that birth and death of firms (associated with entry and exit) can generate macroeconomic fluctuations without technology shocks.

Suggested Citation

  • Mazzoli, Marco & Lombardini, Simone, 2021. "Business cycle in an oligopolistic economy with entry and exit," Journal of Macroeconomics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:jmacro:v:69:y:2021:i:c:s0164070421000409
    DOI: 10.1016/j.jmacro.2021.103335
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    More about this item

    Keywords

    Business fluctuations; Industrial organization and macroeconomics;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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