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A note on input congestion

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  • Rødseth, Kenneth Løvold
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    Abstract

    The notion of effective space is introduced, and input congestion is explained by economic activities’ exhaustion of effective space. In this setting, I show that profit maximization is inconsistent with input congestion at the firm level, but not necessarily with input congestion at the industry level, when effective space is shared among producers.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 120 (2013)
    Issue (Month): 3 ()
    Pages: 599-602

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    Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:599-602

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Congestion; Firm and industry technologies; Externalities;

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    1. Kuosmanen, Timo & Kortelainen, Mika & Sipiläinen, Timo & Cherchye, Laurens, 2010. "Firm and industry level profit efficiency analysis using absolute and uniform shadow prices," European Journal of Operational Research, Elsevier, vol. 202(2), pages 584-594, April.
    2. Cherchye, Laurens & Kuosmanen, Timo & Post, Thierry, 2001. "Alternative treatments of congestion in DEA: A rejoinder to Cooper, Gu, and Li," European Journal of Operational Research, Elsevier, vol. 132(1), pages 75-80, July.
    3. Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
    4. Murty, Sushama & Robert Russell, R. & Levkoff, Steven B., 2012. "On modeling pollution-generating technologies," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 117-135.
    5. Natalia Kuosmanen & Timo Kuosmanen & Timo Sipiläinen, 2013. "Consistent Aggregation of Generalized Sustainable Values from the Firm Level to Sectoral, Regional or Industry Levels," Sustainability, MDPI, Open Access Journal, vol. 5(4), pages 1568-1576, April.
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