Multiple Expectational Equilibria under Monopolistic Competition
证明垄断竞争经济中存在多重理性预期均衡，乐观预期均衡帕累托优于悲观预期均衡，投资补贴可通过改变预期和减少投资扭曲带来好处。
This paper shows that a monopolistically competitive economy with real investment can have multiple rational expectations equilibria: one is associated with entrepreneurs' optimistic expectations about future demand; another with entrepreneurs' pessimism. It also shows that an optimistic expectational equilibrium Pareto dominates a pessimistic equilibrium. An investment subsidy can be beneficial both by reducing the original underinvestment distortion and by changing firms' expectations from pessimistic to optimistic. The most important assumption is increasing returns to scale, and monopolistic competition makes increasing returns consistent with each producer's optimization.