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Article: Endogenous markups, intensity of competition, and persistence of business cycles
Title | Endogenous markups, intensity of competition, and persistence of business cycles |
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Authors | |
Issue Date | 2007 |
Publisher | Southern Economic Association. The Journal's web site is located at http://www.okstate.edu/economics/journal/jour1.html |
Citation | Southern Economic Journal, 2007, v. 74 n. 2, p. 546-565 How to Cite? |
Abstract | In order to study the propagation mechanism of business cycles, in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles, this paper presents a real business-cycle model with imperfect competition and increasing returns to scale. This analysis considers the markups of price over cost to be endogenous. With endogenous markups, two standard forms of oligopolistic competition - Bertrand and Cournot - are considered. Results show that: (1) the propagation mechanism in the sense of output persistence is greater under Cournot; (2) the propagation mechanism is unequivocally greater with imperfect competition, regardless of whether markups are endogenous or not; and (3) under imperfect competition, the propagation mechanism is greater with endogenous markups than with exogenous markups. Overall, these results suggest that more intense competition produces lower persistence in output growth and, thus, a weaker propagation mechanism. In a calibration exercise, these differences were also found to be quantitatively important. |
Persistent Identifier | http://hdl.handle.net/10722/177749 |
ISSN | 2023 Impact Factor: 1.8 2023 SCImago Journal Rankings: 0.829 |
References |
DC Field | Value | Language |
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dc.contributor.author | Zhang, J | en_US |
dc.date.accessioned | 2012-12-19T09:39:47Z | - |
dc.date.available | 2012-12-19T09:39:47Z | - |
dc.date.issued | 2007 | en_US |
dc.identifier.citation | Southern Economic Journal, 2007, v. 74 n. 2, p. 546-565 | en_US |
dc.identifier.issn | 0038-4038 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/177749 | - |
dc.description.abstract | In order to study the propagation mechanism of business cycles, in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles, this paper presents a real business-cycle model with imperfect competition and increasing returns to scale. This analysis considers the markups of price over cost to be endogenous. With endogenous markups, two standard forms of oligopolistic competition - Bertrand and Cournot - are considered. Results show that: (1) the propagation mechanism in the sense of output persistence is greater under Cournot; (2) the propagation mechanism is unequivocally greater with imperfect competition, regardless of whether markups are endogenous or not; and (3) under imperfect competition, the propagation mechanism is greater with endogenous markups than with exogenous markups. Overall, these results suggest that more intense competition produces lower persistence in output growth and, thus, a weaker propagation mechanism. In a calibration exercise, these differences were also found to be quantitatively important. | en_US |
dc.language | eng | en_US |
dc.publisher | Southern Economic Association. The Journal's web site is located at http://www.okstate.edu/economics/journal/jour1.html | en_US |
dc.relation.ispartof | Southern Economic Journal | en_US |
dc.title | Endogenous markups, intensity of competition, and persistence of business cycles | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zhang, J: jjzhang@econ.hku.hk | en_US |
dc.identifier.authority | Zhang, J=rp01124 | en_US |
dc.description.nature | link_to_subscribed_fulltext | en_US |
dc.identifier.scopus | eid_2-s2.0-36349012369 | en_US |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-36349012369&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 74 | en_US |
dc.identifier.issue | 2 | en_US |
dc.identifier.spage | 546 | en_US |
dc.identifier.epage | 565 | en_US |
dc.publisher.place | United States | en_US |
dc.identifier.scopusauthorid | Zhang, J=55367373100 | en_US |
dc.identifier.issnl | 0038-4038 | - |