This paper presents a set of results concerning price formation and convergence to perfect competition in markets populated by sellers of differentiated products. It generalizes results of Butters (1977), Hart (1979), Perloff and Salop (1985), Wolinsky (1986), Armstrong et al. (2009), and...

This paper develops a dynamic model of price competition where buyers have constrained consideration sets due to unawareness. Awareness evolves over time and is influenced by word-of-mouth: if more buyers choose to shop at one seller, then unaware buyers are more likely to discover that seller....

In product markets, there exists substantial dispersion in prices for transactions of physically identical goods, and incumbent sellers sell at higher prices than entrants. This study develops a theory of dynamic pricing that explains these facts as results from the same fundamental friction:...

Methodologies for the construction of national accounts often differ across time and countries. This paper discusses issues raised by this methodological heterogeneity on the long-run measure of economic growth and presents two sets of internationally comparable estimates of GDP for the period...

This paper shows that perfectly competitive behavior can occur in individual markets that exhibit frictions of trading. I consider an environment where firms hire workers to produce an output sold in a product market. Both markets are frictional as consumers and workers have imperfect access to...

According to Nordhaus, the optimal life of a patent T* trades off the ``embarrassment" of monopoly with motivating innovation, given that imitators would otherwise copy inventions and, in competing with innovators, reduce their profit hence incentive to innovate. To test this argument, we...

A recent literature has provided empirical evidence that markups are increasing and are heterogeneous across firms. In standard monopolistic competition models, such heterogeneity implies inefficiency even in the presence of free entry. We enrich the standard model of monopolistic competition...