Abstract
The paper explores the effects of markup variability, associated with free entry of Cournotian firms, on the occurrence of local indeterminacy, local Hopf bifurcations and multiplicity of steady states. It uses an overlapping generations model with capital, in which differentiated intermediate goods are produced with constant marginal cost plus a positive fixed cost. If the markup factor were constant (the case of no free entry or the case of zero fixed costs leading to the perfectly competitive outcome), no local endogenous fluctuations or multiplicity of steady states can emerge, unless factors of production are complementary. On the contrary, with any positive (variable) market power, indeterminacy and multiplicity of steady states is possible for any value of the elasticity of technological substitution, and local Hopf bifurcations may also emerge, provided (variable) market power is high enough.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
