Industry Mixture, Oligopoly, and General Equilibrium
1
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This paper presents a tractable general-equilibrium model, which features both industry mixture of large-small firms and strategic firm behavior. The main objective of this paper is to incorporate the roles of large firms into general equilibrium analysis. It can be supposed that small firms form a union to overcome small-scale disadvantage for competing with large firms. Thus, this paper considers that large firms and a union of small firms compete to determine output schedule through strategic interaction. Two different cases can be considered: firm homogeneity and firm heterogeneity. For the case of firm homogeneity, there is no difference of productivity level across firms. For the case of firm heterogeneity, the level differs across firms, and firm-selection occurs. When the productivity level improves in large firms, total output of small firms shrinks. The shrinkage of total output drives out lower-productivity small firms. Then, the resources are reallocated towards higher-productivity small firms, and the average productivity of small firms improves. In this paper, high-productivity large firms contribute to increasing aggregate income and lowering aggregate price. High-productivity small firms contribute to lowering aggregate price. The novelty of this paper is to explain how the productivity improvement of large firms can generate pro-competition effect in the economy. This paper can contribute to the literature of oligopoly and general equilibrium.
Abstract
This paper presents a tractable general-equilibrium model, which features both industry mixture of large-small firms and strategic firm behavior. The main objective of this paper is to incorporate the roles of large firms into general equilibrium analysis. It can be supposed that small firms form a union to overcome small-scale disadvantage for competing with large firms. Thus, this paper considers that large firms and a union of small firms compete to determine output schedule through strategic interaction. Two different cases can be considered: firm homogeneity and firm heterogeneity. For the case of firm homogeneity, there is no difference of productivity level across firms. For the case of firm heterogeneity, the level differs across firms, and firm-selection occurs. When the productivity level improves in large firms, total output of small firms shrinks. The shrinkage of total output drives out lower-productivity small firms. Then, the resources are reallocated towards higher-productivity small firms, and the average productivity of small firms improves. In this paper, high-productivity large firms contribute to increasing aggregate income and lowering aggregate price. High-productivity small firms contribute to lowering aggregate price. The novelty of this paper is to explain how the productivity improvement of large firms can generate pro-competition effect in the economy. This paper can contribute to the literature of oligopoly and general equilibrium.
참고문헌 (19)
- Dixit, A, J. Stiglitz, "Monopolistic Competition and Optimal Product Diversity", 67(3), pp.297~308 (1977)
- Hopenhayn, H., "Entry, Exit, and Firm Dynamics in Long Run Equilibrium", Econometrica, 60(5), pp.1127~1150 (1992)
- Hopenhayn, H., "Exit, Sel ection, and the Value of Firms", Journal of Economic Dynamics and Control, 16, pp.621~653 (1992)
- Eckel, C., "Multi-product firms and flexible manufacturing in the global economy", Review of Economic Studies, 11, pp.188~217 (2010)
- Egger, H, "Labor Unions and Multi-Product Firms in Closed and Open Economies", Canadian Journal of Economics, 45(4), pp.1456~1479 (2012)
- Egger, H, "Differences in the Degree of Unionization as a Source of Comparative Advantage in Open Economies", Canadian Journal of Economics, 48(1), pp.245~272 (2015)
- Hottman, C. J., "Quantifying the Sources of Firm Heterogeneity", Quarterly Journal of Economics, 131(3), pp.1291~1364 (2016)
- 이양승, "Distribution of Labor Qualities and Comparative Advantage", 경제연구, 38(2), pp.1~30 (2020), 한국경제통상학회
- 이양승, "Heterogeneous Firms, Skill-Biased Management, and Trade", 경제연구, 38(4), pp.1~19 (2020), 한국경제통상학회
- 이양승, "Entrepreneurs, Managers, and the Firm Size Distribution", International Economic Journal, 35(3), pp.367~390 (2021), 한국국제경제학회[DOI]
- 이양승, "Dog Fighting, Behavioral Type, and Strategic Management", 경제연구, 39(2), pp.279~297 (2021), 한국경제통상학회
- Lucas, R. E., "On the Size Distribution of Business Firms", The Bell Journal of Economics, 9(2), pp.508~523 (1978)
- Melitz, M. J., "The Impact of Trade on Intra-Industry Reallocation and Aggregate Industry Productivity", Econometrica, 71(6), pp.1695~1725 (2003)
- Neary, J. P., "Presidential Address : Globalization and Market Structure", Journal of the European Economic Association, 1(2-3), pp.245~271 (2003)
- Neary, J. P., "Superstar Firms and Trade" (2012), Nottingham Lectures in International Economics
- Neary, J. P., "International Trade in General Oligopolistic Equilibrium", Review of International Economics, 24(4), pp.669~698 (2016)
- Pan, L., "Is a Big Entrant a Threat to Incumbents? The Role of Demand Substitutability in Competition Among the Big and the Small", Journal of Industrial Economics, 66(1), pp.30~65 (2018)
- Parenti, M., "Large and Small Firms in a Global Market: David vs. Goliath", Journal of International Economics, 110, pp.103~118 (2018)
- Shimomura, K., "Competition among the Big and the Small", RAND Journal of Economics, 43(2), pp.329~347 (2012)