On The Welfare Effects and Political Economy of Competition-Enhancing Policies  

Oleh:

Aghion, Philippe ; Schankerman, Mark

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 114 no. 498 (Oct. 2004), page 800-824.
Topik: POLICIES; welfare; political economy; competition; policies
Fulltext: 800.pdf (176.86KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.15 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We analyse the welfare effects of policies that intensify product market competition, and the channels through which they operate. Using a circular model of horizontal product differentiation with asymmetric costs, we study the effects of increased price competition on market selection among incumbent firms, cost reduction effort, and entry of new firms. The model also generates an endogenous demand for competition - enhancing or retarding policies arising from cost heterogeneity, and we demonstrate the possibility of a 'low - competition' political economy trap. Simulations of the model illustrate that the selection effects we analyse, which traditional cost - benefit analysis is unlikely to capture, can be large.

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