Endogenous mark-ups have been a matter of interest in macroeconomics, especially from the middle 1990â€™s onwards. However, the complexity of this class of models, does not allow general ualitative conclusions in most cases, and there is plenty of room for investigation, especially in the reasons driving the emergence of multiple equilibria and non-saddle-point dynamics. In this article we extend a simple dynamic general equilibrium model to include the possibility of strategic interaction between producers in each industry, and entry affects the level of macroeconomic efficiency through an endogenous mark-up. We demonstrate multiple equilibria is a likely outcome even in an exogenous labour-supply framework. A pair of equilibria exists (a stable and an unstable one) and they are connected through a heteroclinic orbit. When we allow labour supply to vary, a third equilibrium may emerge if the government is present in the economy, and local indeterminacy may exist
Endogenous mark-ups, Multiple equilibria, Local dynamics
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.