In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of...

Normalising CES production functions in the calibration of basic dynamic models allows to choose technology parameters in an economically plausible way. When variations in the elasticity of substitution are considered, normalisation is necessary in order to exclude arbitrary effects. As an...

In his paper ‘‘Looking Back, Looking Ahead: Biased Technological Change, Substitution and the Wage Gap'' Theo van de Klundert employs a two-goods, two-factors general equilibrium model, applying the powerful "hat calculus technique" introduced by Meade (1961), to study the determinants of...