Firms that provide capacity to meet randomly fluctuating demand typically will not be producing on the efficient frontier of their production possibilities sets. Consequently, the standard dual theory of cost and production is inapplicable. This article provides an alternative that leaves most of the theory intact provided that firms are viewed as producing the probability of providing services rather than an explicitly produced output. As an application we show that for a telecommunications firm facing a network externality it is quite possible to find something that looks like negative marginal cost. Copyright 1990 by Kluwer Academic Publishers
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Did you know? All full texts are decentralized with the publishers, none reside on this server, thus making it possible to offer this service for free to all parties.