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Industry Total Cost Functions and the Status of the Core

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  • Telser, Lester G

Abstract

The industry total cost function gives the least total cost to an industry of producing a prescribed total output. For standard demand schedules where price and quantity vary inversely, a nonempty core requires nondecreasing returns to scale. Because a nonempty core is necessary for a neoclassical competitive equilibrium, this means an industry can be in a competitive equilibrium only if it has nondecreasing returns to scale. Thus, industries in which the firms have identical U-shaped average cost (Viner industries) or flat-bottomed average cost do not satisfy this condition so they cannot have a competitive equilibrium for arbitrary standard demand schedules. Copyright 1991 by Blackwell Publishing Ltd.

Suggested Citation

  • Telser, Lester G, 1991. "Industry Total Cost Functions and the Status of the Core," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 225-240, March.
    • Handle: RePEc:bla:jindec:v:39:y:1991:i:3:p:225-40
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    Cited by:

    1. Dick, Andrew R., 1992. "Japanese Antitrust Law and the Competitive Mix," Working Papers 74, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    2. Alejandro Saporiti & German Coloma, 2008. "Bertrand's price competition in markets with fixed costs," RCER Working Papers 541, University of Rochester - Center for Economic Research (RCER).
    3. Kenneth Button & Peter Nijkamp, 1997. "Network Industries, Economic Stability and Spatial Integration," Tinbergen Institute Discussion Papers 97-047/3, Tinbergen Institute.
    4. Germán Coloma & Alejandro Saporiti, 2006. "Bertrand equilibria in markets with fixed costs," Economics Discussion Paper Series 0627, Economics, The University of Manchester.
    5. Saporiti Alejandro & Coloma Germán, 2010. "Bertrand Competition in Markets with Fixed Costs," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-30, June.

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