Lundi 17 octobre 2016,  13:00 – 14:00

Maison des Sciences Économiques, Salle S/115

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

avec Raouf BOUCEKKINE (Université Aix-Marseille, AMSE)

Variable mark-ups in the long-run:
a generalisation of preferences in growth models
 This paper introduces variable markups in a horizontal-differentiation growth model by considering the larger class of indirectly additive preference specifications, that nests the classic CES specification usually present in the workhorse love-for-variety models. Our first result is to obtain a generalized characterization of the Euler condition for this broader class of utility functions: in our model, the Euler rule features a supplementary term aiming at compensating the consumer for variations in the preference for variety along the consumption level. We are then also able to demonstrate that in our generalized framework, the economy’s balanced growth path displays both endogenous markups AND a strictly positive growth rate of the number of available varieties (being the engine of growth). We then show that under endogenous markups, the economy’s growth rate and firms’ market power can display a negative correlation, as opposed to the standard result obtained in the CES framework and as empirically relevant (Aghion et al, 2005). Finally, we demonstrate the existence of a market-size effect on mark-ups in our dynamic framework, a property being absent from static set-ups featuring indirectly additive preferences.