Working Paper No. 878

Endogenous Product Differentiation, Market Size and Prices

Published: August 12, 2011Pages: 27Keywords: Endogenous Technology; Entry; Market Size Effect; International Trade; Monopolistic CompetitionJEL-codes: D43; F12; L13
Published version

Endogenous Product Differentiation, Market Size and Prices Shon Ferguson


Recent empirical evidence suggests that prices for some goods and services are higher in larger markets. This paper provides a demand-side explanation for this phenomenon when firms can choose how much to differentiate their products in a model of monopolistic competition with horizontal product differentiation. The model proposes that consumers’ love of variety makes them more sensitive to product differentiation efforts by firms, which leads to higher prices in larger markets. At the same time, endogenous product differentiation modeled in this way can lead to a positive and concave relationship between market size and entry.
 

Shon Ferguson

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Ph: +46 8 665 4523
shon.ferguson@ifn.se

Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

Pages-from-2019-Calmfors-Gassen---Integrating-Immigrants-into-the-Nordic-Labour-Markets.gif

Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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