The author establishes a property of supply for a competitive firm: Assuming differentiability of the production frontier, linearly independent price vectors have disjoint image sets under the supply mapping. This property supports the main results. First, the author drew a simple proof of McFadden’s proposition that differentiability of the production frontier is necessary and sufficient for strict quasiconvexity of the profit function. This proposition rules out linearity of the profit function on any subset of price domain, in turn ruling out supply and input- demand functions that are constant and have zero values for all price effects. Second, for discrete price changes, own-price effects in supply are strictly positive, assuming a differentiable technology. In this context, strict convexity of the production set is irrelevant. The author indicates implications for cost and demand theory.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
For technical questions regarding this item, or to correct its listing, contact: (Andrew Ivers) The email address of this maintainer does not seem to be valid anymore. Please ask Andrew Ivers to update the entry or send us the correct address..