research
On Monopolistic Competition and Optimal Product Diversity: a Comment on Cost Structure and Workers' Rents
- Publication date
- Publisher
Abstract
In the Dixit-Stiglitz model of monopolistic competition, entry of firms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that the cost structure and workers's rents can also explain excess entry.monopolistic competition; product diversity