THE THEORY OF ENDOGENOUS MARKET STRUCTURES

Most market structures are neither perfectly or monopolistically competitive: they are characterized by a few large firms that are engaged in strategic interactions in their production and investment decisions and whose number is endogenous. The theory of endogenous market structures analyzes markets in partial and general equilibrium where strategies affect entry and entry affects strategies, and exogenous primitive conditions on technology and preferences affect the equilibrium. We discuss applications to industrial organization, international trade, business cycle theory, international finance, growth and implications for welfare and for competition, trade, fiscal and monetary policy.