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Title:Non-smooth dynamics and multiple equilibria in a Cournot-Ramsey model with endogenous markups PDF Logo
Authors:Brito, Paulo
Costa, Luís F.
Dixon, Huw
Issue Date:2008
Series/Report no.:Cardiff Economics Working Papers E2008/21
Abstract:We develop a simple Ramsey model with numerous Cournotian industries where entry generates an endogenous markup. The model produces two different regimes: a monopoly and an oligopoly one. We provide a rigorous study of non-smooth dynamics and we also analyse the global dynamics of the model, demonstrating the model exhibits robust heteroclinic orbits, either of the smooth or the non-smooth type. Similar economies may be in any of these regimes and they may change regime along its convergence path. Fixed costs and elasticities of demand, play a crucial role and changing their values may alter the dynamics in a radical way, either by inducing a discontinuous transition or a discontinuous hysteresis.
Subjects:endogenous mark-ups
non-smooth dynamics
discontinuous induced bifurcations
heteroclinic orbits
Document Type:Working Paper
Appears in Collections:Cardiff Economics Working Papers, Cardiff Business School, Cardiff University

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