| In the section | Articles |
| Title of the article | Monopolistic Competition in Two-Sector Economy under Demand Uncertainty |
| Pages | 12-25 |
| Author 1 | Alexander Borisovich Shapoval Doctor of Physical and Mathematical, Professor, Leading Researcher Financial University under the Government of the Russian Federation NES CSDSINRU HSE 49 Leningradskiy pr., Moscow, Russia, 12546847 Nakhimovskiy pr., Moscow, Russia, 11741820 Myasnitskaya Street, Moscow, Russia, 101000 This email address is being protected from spambots. You need JavaScript enabled to view it. |
| Author 2 | Vasiliy Mikhailovich Goncharenko Candidate of Physical and Mathematical, Assistant Professor. Financial University under the Government of the Russian Federation 49 Leningradskiy pr., Moscow, Russia, 125468 This email address is being protected from spambots. You need JavaScript enabled to view it. |
| Abstract | 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. |
| Code | 339.133.017, 339.5.012.42 |
| DOI | 10.14530/se.2014.3.12-25 |
| Keywords | ♦ monopolistic competition ♦ backward induction ♦ demand uncertainty |
| Download | SE.2014.3.012-025.Shapoval.pdf |
| For citation | Shapoval A.B., Goncharenko V.M. Monopolistic Competition in Two-Sector Economy under Demand Uncertainty. Prostranstvennaya Ekonomika = Spatial Economics, 2014, no. 3, pp. 12-25. DOI: 10.14530/se.2014.3.12-25. (In Russian). |
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