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Welfare, competition, specialization and growth

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  • Onori, Daria

Abstract

In this paper we consider a model of horizontal differentiation with a quite general production function and derive the closed form solutions for the level of the variables in the decentralized economy and in the social planner case. This enables us to analyze how consumers’ welfare varies in terms of the degree of competition and the degree of returns to specialization. We find that welfare is increasing in the degree of returns to specialization both in the market economy and in the centralized economy and the decentralized economy's welfare is a bell-shaped function of the degree of competition.

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  • Onori, Daria, 2012. "Welfare, competition, specialization and growth," Research in Economics, Elsevier, vol. 66(4), pages 355-370.
    • Handle: RePEc:eee:reecon:v:66:y:2012:i:4:p:355-370
    DOI: 10.1016/j.rie.2012.07.002
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    More about this item

    Keywords

    Closed form solutions; Welfare; Competition; Returns to specialization;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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