search query: @author Holland, S. P. / total: 2
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| Author: | Holland, S. P. |
| Title: | Set-up costs and the existence of competitive equilibrium when extraction capacity is limited |
| Journal: | Journal of Environmental Economics and Management
2003 : NOV, VOL. 46:3, p. 539-556 |
| Index terms: | capacity competitive equilibrium set-up costs |
| Language: | eng |
| Abstract: | This article demonstrates that the fact that a Walrasian competitive equilibrium cannot exist in simple extraction models with set-up costs, is sensitive to the assumption of unlimited extraction capacity and derives sufficient conditions for existence. An equilibrium exists if extraction is limited such that each firm earns sufficient surplus to cover its set-up costs or if firms choose extraxction capacity subject to non-increasing returns. The resulting competitive equilibrium price either grows at the rate of interest when total extraction is below industry capacity or is constant when industry capacity is fully utilized. |
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