Endogenous Entry, Product Variety, and Business Cycles
This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to sunk investment costs. The slu...
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| Veröffentlicht in: | The Journal of political economy 2012-04, Vol.120 (2), p.304-345 |
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| container_end_page | 345 |
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| container_issue | 2 |
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| container_title | The Journal of political economy |
| container_volume | 120 |
| creator | Bilbiie, Florin O. Ghironi, Fabio Melitz, Marc J. |
| description | This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to sunk investment costs. The sluggish response of the number of producers generates a new and potentially important endogenous propagation mechanism for business cycle models. The return to investment determines household saving decisions, producer entry, and the allocation of labor across sectors. Our framework replicates several features of business cycles and predicts procyclical profits even for preference specifications that imply countercyclical markups. |
| doi_str_mv | 10.1086/665825 |
| format | Article |
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Economic expansions induce higher entry rates by prospective entrants subject to sunk investment costs. The sluggish response of the number of producers generates a new and potentially important endogenous propagation mechanism for business cycle models. The return to investment determines household saving decisions, producer entry, and the allocation of labor across sectors. 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Economic expansions induce higher entry rates by prospective entrants subject to sunk investment costs. The sluggish response of the number of producers generates a new and potentially important endogenous propagation mechanism for business cycle models. The return to investment determines household saving decisions, producer entry, and the allocation of labor across sectors. Our framework replicates several features of business cycles and predicts procyclical profits even for preference specifications that imply countercyclical markups.</description><subject>Business cycles</subject><subject>Business models</subject><subject>Business structures</subject><subject>Capital investments</subject><subject>Consumer economics</subject><subject>Economic expansion</subject><subject>Economic fluctuations</subject><subject>Economic forecasts</subject><subject>Economic models</subject><subject>Economic theory</subject><subject>Economics and Finance</subject><subject>Household consumption</subject><subject>Humanities and Social Sciences</subject><subject>Investment</subject><subject>Macroeconomic modeling</subject><subject>Macroeconomics</subject><subject>Markups</subject><subject>Planning methods</subject><subject>Political economy</subject><subject>Producers</subject><subject>Product management</subject><subject>Productivity</subject><subject>Structural capital</subject><subject>Studies</subject><subject>U.S.A</subject><issn>0022-3808</issn><issn>1537-534X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2012</creationdate><recordtype>article</recordtype><recordid>eNqN0F1r2zAUBmAxWliabr_BsDJWqLujow-rl1lIm0KgvdjG7oQiyY2Da6WSXci_r4rHAoVBdSM4PJyPl5DPFC4pKPldSqFQfCATKlhVCsb_HJEJAGLJFKiP5CSlLeRHgU2IXHQuPPguDKlYdH3cXxT3MbjB9sVvExvf54LpXPFjSE3nUyrme9v6dEqOa9Mm_-nvPyW_rhc_58tydXdzO5-tSiuA9yVXhjvmLFaSO0QrOVq3FqgcSm-ZkqoGhVChA3nl14pB7a-8p5WqkVZryabkfOy7Ma3exebRxL0OptHL2Uq_1gCkAsn4M83222h3MTwNPvX6sUnWt63pfD5PU0SquOAImX55Q7dhiF2-RFNAKbhQDLP6OiobQ0rR1_82oKBfo9Zj1IfJg9001jyEXcxRHXqOTO9cnenZO-hhwW3qQ_zf3Bd_kpKE</recordid><startdate>20120401</startdate><enddate>20120401</enddate><creator>Bilbiie, Florin O.</creator><creator>Ghironi, Fabio</creator><creator>Melitz, Marc J.</creator><general>University of Chicago Press</general><general>University of Chicago, acting through its Press</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope><scope>1XC</scope><scope>BXJBU</scope><scope>IHQJB</scope><scope>VOOES</scope></search><sort><creationdate>20120401</creationdate><title>Endogenous Entry, Product Variety, and Business Cycles</title><author>Bilbiie, Florin O. ; Ghironi, Fabio ; Melitz, Marc J.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c504t-48a4d3dc2764d22c642cdb528d26ec3868f082072d069eb830fe9ee178f217b63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2012</creationdate><topic>Business cycles</topic><topic>Business models</topic><topic>Business structures</topic><topic>Capital investments</topic><topic>Consumer economics</topic><topic>Economic expansion</topic><topic>Economic fluctuations</topic><topic>Economic forecasts</topic><topic>Economic models</topic><topic>Economic theory</topic><topic>Economics and Finance</topic><topic>Household consumption</topic><topic>Humanities and Social Sciences</topic><topic>Investment</topic><topic>Macroeconomic modeling</topic><topic>Macroeconomics</topic><topic>Markups</topic><topic>Planning methods</topic><topic>Political economy</topic><topic>Producers</topic><topic>Product management</topic><topic>Productivity</topic><topic>Structural capital</topic><topic>Studies</topic><topic>U.S.A</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Bilbiie, Florin O.</creatorcontrib><creatorcontrib>Ghironi, Fabio</creatorcontrib><creatorcontrib>Melitz, Marc J.</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><collection>Hyper Article en Ligne (HAL)</collection><collection>HAL-SHS: Archive ouverte en Sciences de l'Homme et de la Société</collection><collection>HAL-SHS: Archive ouverte en Sciences de l'Homme et de la Société (Open Access)</collection><collection>Hyper Article en Ligne (HAL) (Open Access)</collection><jtitle>The Journal of political economy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Bilbiie, Florin O.</au><au>Ghironi, Fabio</au><au>Melitz, Marc J.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Endogenous Entry, Product Variety, and Business Cycles</atitle><jtitle>The Journal of political economy</jtitle><date>2012-04-01</date><risdate>2012</risdate><volume>120</volume><issue>2</issue><spage>304</spage><epage>345</epage><pages>304-345</pages><issn>0022-3808</issn><eissn>1537-534X</eissn><coden>JLPEAR</coden><abstract>This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. 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| ispartof | The Journal of political economy, 2012-04, Vol.120 (2), p.304-345 |
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| language | eng |
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| source | Business Source Complete; JSTOR Archive Collection A-Z Listing; University of Chicago Press Journals (Full run) |
| subjects | Business cycles Business models Business structures Capital investments Consumer economics Economic expansion Economic fluctuations Economic forecasts Economic models Economic theory Economics and Finance Household consumption Humanities and Social Sciences Investment Macroeconomic modeling Macroeconomics Markups Planning methods Political economy Producers Product management Productivity Structural capital Studies U.S.A |
| title | Endogenous Entry, Product Variety, and Business Cycles |
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