Economics, Econometrics and Finance
8 years ago

Monopolistic competition shapes economy's response to demand shifts.

1 view
American Economic Review
Monopolistic Competition and the Effects of Aggregate Demand
Olivier Blanchard, Nobuhiro Kiyotaki

Paper Summary

Monopolistic competition plays a role in how changes in overall demand impact output. Imperfections in competition, including monopolistic competition, can lead to effects on output that perfect competition cannot. In the economy, monopolistic competition can accurately explain how output responds to changes in demand.

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