Monopolistic Competition in Two-Sector Economy under Demand Uncertainty
The article deals with the theory of monopolistic competition under demand uncertainty. The authors consider the economy with labor immobility consisting of the high-tech sector with monopolistic competition and the standard sector with perfect competition. Preferences between sectors are specified...
| Main Authors: | , |
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| Format: | Article |
| Language: | Russian |
| Published: |
Economic Research Institute of the Far East Branch of the Russian Academy of Sciences
2014-06-01
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| Series: | Prostranstvennaâ Èkonomika |
| Subjects: | |
| Online Access: | http://spatial-economics.com/eng/images/spatial-econimics/3_2014/SE.2014.3.012-025.Shapoval.pdf |
| _version_ | 1818824139685756928 |
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| author | Alexander Borisovich Shapoval Vasiliy Mikhailovich Goncharenko |
| author_facet | Alexander Borisovich Shapoval Vasiliy Mikhailovich Goncharenko |
| author_sort | Alexander Borisovich Shapoval |
| collection | DOAJ |
| description | The article deals with the theory of monopolistic competition under demand uncertainty. The authors consider the economy with labor immobility consisting of the high-tech sector with monopolistic competition and the standard sector with perfect competition. Preferences between sectors are specified by the Cobb - Douglas production function. It is assumed that companies make output decisions under preferences uncertainty and consumers’ distribution by sectors will be known by the time of realization. It means that firms are informed about consumer demand with accuracy up to a multiplicative uncertainty which is generated by random parameters in the Cobb - Douglas production function. The paper shows that demand uncertainty leads to consistent growth of prices and wages in high-tech sector in relation to salaries in the second sector. The impact of uncertainty on welfare is ambiguous. In particular, under the known expected value of uncertainty customers derive benefit from exaggerated companies’ expectations about clients’ desire to consume high-tech goods |
| first_indexed | 2024-12-18T23:51:08Z |
| format | Article |
| id | doaj.art-cbd05e63f37949338fce210c3fb4f5a4 |
| institution | Directory Open Access Journal |
| issn | 1815-9834 2587-5957 |
| language | Russian |
| last_indexed | 2024-12-18T23:51:08Z |
| publishDate | 2014-06-01 |
| publisher | Economic Research Institute of the Far East Branch of the Russian Academy of Sciences |
| record_format | Article |
| series | Prostranstvennaâ Èkonomika |
| spelling | doaj.art-cbd05e63f37949338fce210c3fb4f5a42022-12-21T20:46:56ZrusEconomic Research Institute of the Far East Branch of the Russian Academy of SciencesProstranstvennaâ Èkonomika1815-98342587-59572014-06-013122510.14530/se.2014.3.12-25Monopolistic Competition in Two-Sector Economy under Demand UncertaintyAlexander Borisovich Shapoval0Vasiliy Mikhailovich Goncharenko1Financial University under the Government of the Russian Federation NES CSDSINRU HSEFinancial University under the Government of the Russian FederationThe article deals with the theory of monopolistic competition under demand uncertainty. The authors consider the economy with labor immobility consisting of the high-tech sector with monopolistic competition and the standard sector with perfect competition. Preferences between sectors are specified by the Cobb - Douglas production function. It is assumed that companies make output decisions under preferences uncertainty and consumers’ distribution by sectors will be known by the time of realization. It means that firms are informed about consumer demand with accuracy up to a multiplicative uncertainty which is generated by random parameters in the Cobb - Douglas production function. The paper shows that demand uncertainty leads to consistent growth of prices and wages in high-tech sector in relation to salaries in the second sector. The impact of uncertainty on welfare is ambiguous. In particular, under the known expected value of uncertainty customers derive benefit from exaggerated companies’ expectations about clients’ desire to consume high-tech goodshttp://spatial-economics.com/eng/images/spatial-econimics/3_2014/SE.2014.3.012-025.Shapoval.pdfmonopolistic competitionbackward inductiondemand uncertainty |
| spellingShingle | Alexander Borisovich Shapoval Vasiliy Mikhailovich Goncharenko Monopolistic Competition in Two-Sector Economy under Demand Uncertainty Prostranstvennaâ Èkonomika monopolistic competition backward induction demand uncertainty |
| title | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| title_full | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| title_fullStr | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| title_full_unstemmed | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| title_short | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| title_sort | monopolistic competition in two sector economy under demand uncertainty |
| topic | monopolistic competition backward induction demand uncertainty |
| url | http://spatial-economics.com/eng/images/spatial-econimics/3_2014/SE.2014.3.012-025.Shapoval.pdf |
| work_keys_str_mv | AT alexanderborisovichshapoval monopolisticcompetitionintwosectoreconomyunderdemanduncertainty AT vasiliymikhailovichgoncharenko monopolisticcompetitionintwosectoreconomyunderdemanduncertainty |