Data and code for: A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers

Principal Investigator(s):  View help for Principal Investigator(s) Sergey Kokovin, HSE University, St. Petersburg; Alina Ozhegova, Norwegian School of Economics, Department of Economics; Shamil Sharapudinov, Pennsylvania State University, Department of Economics; Alexander Tarasov, HSE University, Moscow; Philip Ushchev, ECARES, Universite Libre de Bruxelles

Version:  View help for Version V1

Name File Type Size Last Modified
Counterfactual_1.m text/x-matlab 11 KB 03/14/2023 09:41:PM
Counterfactual_2.m text/x-matlab 10.4 KB 09/10/2023 01:05:AM
Model_Calibration.m text/x-matlab 5.8 KB 10/09/2023 12:22:AM
g_new.m text/x-matlab 302 bytes 03/14/2023 09:41:PM
l.m text/x-matlab 162 bytes 03/14/2023 09:41:PM
l_ratio.m text/x-matlab 214 bytes 03/14/2023 09:41:PM
prod_dist_calibration.ipynb text/plain 498.8 KB 10/09/2023 01:05:AM
requirements.txt text/plain 119 bytes 10/02/2023 09:38:PM

Project Description

Summary:  View help for Summary
Our novel approach to modeling monopolistic competition with heterogeneous firms and consumers involves spatial product differentiation. Space can be interpreted either as a geographical space or as a space of characteristics of a differentiated good. In addition to price setting, each firm also chooses its optimal location in this space. We formulate conditions for positive sorting: more productive firms serve larger market segments and face tougher competition; and for the existence and uniqueness of the equilibrium. To quantify the role of the sorting mechanism, we calibrate the model using cross-sectional haircut market data and perform counterfactual analysis. We find that inequality in the distribution of the gains among consumers caused by positive market shocks can be substantial: the gains of consumers from more populated locations are 3-4 times higher.

Scope of Project

Subject Terms:  View help for Subject Terms Monopolistic Competition; Spatial economics; Spatial data
JEL Classification:  View help for JEL Classification
      F10 Trade: General
      L11 Production, Pricing, and Market Structure; Size Distribution of Firms
      L13 Oligopoly and Other Imperfect Markets
Geographic Coverage:  View help for Geographic Coverage Bergen, Norway
Universe:  View help for Universe Hairdressers in Bergen, Norway
Data Type(s):  View help for Data Type(s) aggregate data; geographic information system (GIS) data; observational data

Methodology

Unit(s) of Observation:  View help for Unit(s) of Observation firm

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Published Versions

V1 [2024-03-29]

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