Marco Mazzoli on Industrial structure and the macroeconomy: modelling a macroeconomic system with oligopoly, endogenous market structure and heterogeneous social groups

 This work introduces a new theoretical macroeconomic framework for an oligopolistic economy with heterogeneous agents, social mobility and wage rigidity, to generate macroeconomic fluctuations. Social mobility is modelled by micro-founding the model in accordance with Aoki and Yoshikawa (2007) approach and, in addition, by assuming that agents, in spite of having the same preferences (modelled with a conventional CRRA utility function), are heterogeneous in their budget constraint. This allows to explicitly model conflict and social mobility: we assume that agents may change their social status in each period according to a stochastic process interacting with the labour market and the entry/exit process. The empirical part of this pa- per introduces a simulation built on an "agent based" approach, where the business cycle is generated by an entry/exit mechanism, interacting with the labour market equilibrium and with the macroeconomic equilibrium. This theoretical framework may be employed for further research focused on en- try/exit, business cycle and social mobility with heterogeneous agents.