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Fixed cost, variable cost, markups and returns to scale

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  • Xi Chen
  • Bertrand M. Koebel

Abstract

This paper derives the structure of a production function which is necessary and sufficient for generating a fixed cost. We extend the classical production function in order to allow each input to have a fixed and a variable part. We characterize and estimates both fixed and variable components of the cost function and studies how fixed and variable costs interact and affect firms' behavior in terms of price setting and returns to scale.

Suggested Citation

  • Xi Chen & Bertrand M. Koebel, 2013. "Fixed cost, variable cost, markups and returns to scale," Working Papers of BETA 2013-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2013-13
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    File URL: http://beta.u-strasbg.fr/WP/2013/2013-13.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ryosuke Shimizu & Shohei Momoda, 2020. "Does Automation Technology increase Wage?," KIER Working Papers 1039, Kyoto University, Institute of Economic Research.
    2. Ryosuke Shimizu & Shohei Momoda, 2021. "Does Automation Technology increase Wage?," Discussion papers ron343, Policy Research Institute, Ministry of Finance Japan.
    3. A. Panakhov U. & E. Babkova G. & А. Панахов У. & Э. Бабкова Г., 2019. "Интеграция методов управленческого учета в системе функционального учета затрат // The Integration of Management Accounting Techniques in the Functional-based Costing System," Учет. Анализ. Аудит // Accounting. Analysis. Auditing, ФГОБУВО "Финансовый университет при Правительстве Российской Федерации" // Financial University under The Government of Russian Federation, vol. 6(4), pages 42-52.

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    More about this item

    Keywords

    identification; imperfect competition; returns to scale; unobserved heterogeneity.;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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