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dbr:Dixit–Stiglitz_model
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Dixit–Stiglitz model
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Dixit–Stiglitz model is a model of monopolistic competition developed by Avinash Dixit and Joseph Stiglitz (1977). It has been used in many sub-fields of economics including macroeconomics, economic geography and international trade theory. The model seeks to formalise consumers' preference for product variety by using a typical CES function. Previous attempts to provide a model which accounted for variety preference (such as Harold Hotelling's Location model) were indirect and failed to provide an easily interpretable and usable form for further study. The Dixit-Stiglitz model states that variety preference is already inherent within the assumption of monotonic preferences as a consumer with such preferences prefers to have an average of any two bundles of goods as opposed to extremes.
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dbo:abstract
Dixit–Stiglitz model is a model of monopolistic competition developed by Avinash Dixit and Joseph Stiglitz (1977). It has been used in many sub-fields of economics including macroeconomics, economic geography and international trade theory. The model seeks to formalise consumers' preference for product variety by using a typical CES function. Previous attempts to provide a model which accounted for variety preference (such as Harold Hotelling's Location model) were indirect and failed to provide an easily interpretable and usable form for further study. The Dixit-Stiglitz model states that variety preference is already inherent within the assumption of monotonic preferences as a consumer with such preferences prefers to have an average of any two bundles of goods as opposed to extremes.
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