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| Author: | Small, K. |
| Title: | Economies of scale and self-financing rules with non-competitive factor markets |
| Journal: | Journal of Public Economics
1999 : DEC, VOL. 74:3, p. 431-450 |
| Index terms: | ECONOMICS ECONOMIES OF SCALE FINANCING |
| Language: | eng |
| Abstract: | When a firm or public enterprise prices output at marginal cost, its profits are related to the degree of local scale economies in its cost function. The authors shows that contrary to common belief, this result holds even when scale economies are affected by a rising factor supply curve. Thus marginal-cost pricing may be profitable even with constant returns to scale. Examples are provided for a monopolist both with and without price discrimination, and for a case such as highways where congestion-prone inputs are supplied by users. |
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