Increasing Returns and Efficiency

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Increasing returns to scale is an area in economics that has recently become the focus of much attention. While most firms operate under constant or decreasing return to scale on their relevant range of production, some firms produce goods or services with a technology which exhibits increasing returns to scale at levels of production which are large relative to the market. These goods are an important component of economic activity in a modern economy and are typically commodities produced either by a public sector or, as in the U.S., by regulated utilities. In this study, the author analyzes increasing returns using general equilibrium theory to take into account the interactions between production in the public and the private sector, and the effects of financing the public sector on the redistribution of income.
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Product Details

  • ISBN-13: 9780195065534
  • Publisher: Oxford University Press, USA
  • Publication date: 1/28/1993
  • Pages: 176
  • Lexile: 1500L (what's this?)
  • Product dimensions: 6.31 (w) x 9.56 (h) x 0.78 (d)

Table of Contents

1 Introduction 3
1.1 Origin of Ideas 3
1.2 Recent Developments 8
2 Necessary Conditions for Efficiency 13
2.1 The Production Economy 13
2.2 Supporting Prices for Efficient Allocations 16
2.3 Clarke Normal Cone 18
2.4 Existence of Supporting Prices 21
2.5 Marginal Cost pricing 23
3 Marginal Cost Pricing Equilibrium 27
3.1 Organization of Decisions 27
3.2 Covering Deficits 28
3.3 Two-Part Tariffs 31
3.4 Marginal Cost Pricing Equilibrium 39
4 Efficiency 41
4.1 Inefficiency of All Equilibria 41
4.2 Abstract Condition for Efficiency 47
4.3 Elasticity Condition for Efficiency (One Output) 53
4.4 Examples 64
4.5 Elasticity Condition for Efficiency (Many Outputs) 67
5 Existence 77
5.1 Single Firm Existence Theorem 77
5.2 Example of Productive Inefficiency 83
5.3 General Existence Theorem 87
5.4 Structure of set E[subscript[epsilon]] 90
5.5 Proof of the Existence Theorem 96
6 The Core 101
6.1 Why the Core? 101
6.2 Cooperative Game Theory 103
6.3 Scarf's Negative Result 106
6.4 One Input, One Output 116
6.5 Many Inputs, One Output 120
6.6 Many Inputs, Many Outputs 137
7 Conclusion 153
References 155
Index 161
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