Agricultural monopolistic competitor and the Pigovian tax

A monopolistically competitive agricultural market structure has some features of competition and some features of monopoly. Monopolistic competition has the following attributes: (a) many sellers; (b) product differentiation; and (c) free entry. In the long-run equilibrium, price equals average total cost, and the agricultural firm earns zero economic profit. The aim of this paper is to construct a relatively simple chaotic long-run monopolistic competitor’s agricultural output growth model that is capable of generating stable equilibria, cycles or chaos. A key hypothesis of this work is based on the idea that the coefficient plays a crucial role in explaining local stability of the monopolistic competitor’s agricultural output, where d is the coefficient of the marginal cost function of the agricultural monopolistic competitor; b is the coefficient of the inverse demand function; [] is the coefficient of average cost growth; m is the Pigovian tax rate; and e is the coefficient of the price elasticity of demand.

Issue Date:
Publication Type:
Journal Article
DOI and Other Identifiers:
1418 2106 (Other)
2063 0476 (Other)
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Published in:
Studies in Agricultural Economics, Volume 115, Number 1
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 Record created 2017-04-01, last modified 2018-01-22

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