Endogenous Market Structures and Business Cycles

Abstract

In this chapter, largely based on Etro and Colciago (2007), we open the black box. of the market structure and link the endogenous behavior of .rms at the sectorial level with the general equilibrium properties of the economy, and in particular with its business cycle properties. We consider distinct sectors, each one characterized by many firms supplying homogenous goods (as in the basic neoclassical framework) or differentiated goods (as in the New-Keynesian literature), taking strategic interactions into account and competing either in prices (Bertrand competition) or in quantities (Cournot competition).