Rethinking macroeconomics with endogenous market structure

Do entry, exit and changes in market structure aect the macroeconomy? Is there a link between the strategic interactions among oligopolistic rms and the macroeconomic equilibrium? The question is certainly not trivial in modern economies, where large oligopolistic rms play a relevant role and so many meetings among statesmen have the explicit scope of promoting contracts for some large and important rms of their countries. However, surprisingly enough, the most popular theoretical models in the modern macroeconomic literature hardly see any explicit formalization for the macroeconomic eects of changes in market structure, entry, exit and strategic interactions among oligopolists, if not as mere mechanic and secondary eects of the usual technology shocks, commonly invoked as the cause of business cycle. Do we really think that the sophisticated strategies of large rms' decision makers do not carry any macroeconomic consequences? The market structure and strategic interactions among oligopolists are not necessarily associated to scale economies or technology shocks. In order to better focus on this point, the theoretical model of this book describes, like some of the most important original contributions in the conventional DSGE literature, an economy where the labor is the only production input. This book deals with all these issues by introducing a new macroeconomic approach: part ONE provides its theoretical background and modelling framework, part TWO its implications by running some simulations and comparing the results with the US macroeconomic data.