Endogenous Market Structures and Macroeconomic Theory

Abstract

This article applies the emerging theory of endogenous market structures to macroeconomic issues through a few simple models. First, we study a model of Schumpeterian growth where strategic interactions and endogenous entry de-termine the equilibrium behaviour of the firms investing in R&D. Second, we provide a new framework to study business cycles with imperfect competition in quantities à la Cournot and endogenous entry, and we show how a temporary shock promotes entry, reduces the mark ups and magnifies the impact on con-sumption. Third, we revisit the new trade theory adopting both strategic interac-tions and endogenous entry and revisiting some traditional results on the impact of opening to trade, the optimal tariff and the optimal export subsidy.