Interrelated Factor Demand with Nonconvex Adjustment Costs: a Note
AbstractIn this paper we develop a model to describe a firm’s demand for two production factors which is subject to the presence of nonconvex adjustment costs. In our model simultaneous adjustment of these two production factors may either increase or decrease the total costs incurred by the firm. The magnitude of this change in total costs ultimately determines the likelihood of joint adjustment. We also show that the importance of interrelation is suppressed by large fixed costs.
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Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 002.
Date of creation: 2008
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Economics (Jel: A);
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-01 (All new papers)
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