Increasing Returns and EfficiencyIncreasing 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. |
Contents
| 3 | |
2 Necessary Conditions for Efficiency | 13 |
3 Marginal Cost Pricing Equilibrium | 27 |
4 Efficiency | 41 |
5 Existence | 77 |
6 The Core | 101 |
7 Conclusion | 153 |
| 155 | |
| 161 | |
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Common terms and phrases
agents associated assumptions of Theorem boundary Clarke normal cone coalition compact compensated demand competitive Consider constraint consumers consumption allocation convex cone convex economies convex set core allocation correspondence cost function cost pricing equilibrium decentralized defined definition denote differentiable distributive economy satisfying efficient allocation ensure factor of production feasible allocation fixed cost function f gaussian curvature homeomorphic implies imputation income map increasing returns indifference curve inequality initial resources interior Let us show marginal cost pricing maximizes monopoly monotonic non-convex economies non-convex firms non-empty core output Pareto optimal allocation possible preferences price vector production function production plan production sector profit Proof of Lemma public firms public sector returns to scale simplex social indifference curve tangent Theorem 2.6 two-part tariff U₁ utility functions utility levels v₂ w₁ w₂ x₁ y₁ Y₂ Σα
Popular passages
Page 3 - Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this particular business, they certainly could not each of them have made twenty, perhaps not one pin in a day...
Page 3 - I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size.
Page 3 - But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred...
Page 4 - Here then arises another circumstance which tends to enlarge the extent of a factory. It ought to consist of such a number of machines as shall occupy the whole time of one workman in keeping them in order: if extended beyond that number, the same principle of economy would point out the necessity of doubling or tripling the number of machines, in order to employ the whole time of two or three skilful workmen.
Page 4 - ... one or more operative engineers have been employed, the number of looms may be so arranged that their time shall be fully occupied in keeping the steamengine and the looms in order. " Pursuing the same principles, the manufactory becomes gradually so enlarged that the expense of lighting during the night amounts to a considerable sum ; and as there are already attached to the establishment persons who are up all night, and can therefore constantly attend to it, and also engineers to make and...