Competition

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Abstract

Competition has been modelled in the literature in a number of ways.What do these different parametrizations of competition have in common?For instance, it turns out that it is not always the case that a rise in competition reduces price cost margins, industry wide profits or concentration.All parametrizations of competition, considered here, have two features in common.First, the reallocation effect: a rise in competition raises the profits of a firm relative to the profits of a less efficient firm.Second, a rise in competition reduces the profits of the least efficient firm active in the industry.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages37
Volume2000-104
Publication statusPublished - 2000

Publication series

NameCentER Discussion Paper
Volume2000-104

Keywords

  • competition
  • industrial concentration
  • profit

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  • Cite this

    Boone, J. (2000). Competition. (CentER Discussion Paper; Vol. 2000-104). Macroeconomics.