The contribution of the monopolistic competition model to the banking economy.

Summary Salop's (1979) model of monopolistic competition is widely used in industrial economics. It can also be very useful in banking economics. After recalling some recent applications of this model to the formalization of competition between banking networks (Chiappori et ali (1992), Grimaud-Rochet (1993a), Matutes-Padilla (1991)), we show that it can also provide simple and solid specifications for the monetary and financial part of a macroeconomic model in which the markets for deposits, credits and financial securities are described explicitly.