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Marginal Cost Pricing under Bounded Marginal Returns

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  • Vohra, Rajiv

Abstract

Most of the available results on the existence of marginal cost pricing equilibrium are unsatisfactory in that they make a survival assumption that is stated as a condition on the production equilibria of the economy. The primary objective of this paper is to provide a relatively elementary existence result that replaces such an assumption with one on the primitive data of the economy. The author's main assumption is that no firm faces unbounded increasing returns in the sense that if it uses some input then the rate at which this input can be substituted into an output is finite. Copyright 1992 by The Econometric Society.

Suggested Citation

  • Vohra, Rajiv, 1992. "Marginal Cost Pricing under Bounded Marginal Returns," Econometrica, Econometric Society, vol. 60(4), pages 859-876, July.
  • Handle: RePEc:ecm:emetrp:v:60:y:1992:i:4:p:859-76
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    References listed on IDEAS

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    1. Kannai, Yakar, 1989. "A characterization of monotone individual demand functions," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 87-94, February.
    2. Haerdle,Wolfgang & Stoker,Thomas, 1987. "Investigations smooth multiple regression by the method of average derivatives," Discussion Paper Serie A 107, University of Bonn, Germany.
    3. Stoker, Thomas M, 1986. "Consistent Estimation of Scaled Coefficients," Econometrica, Econometric Society, vol. 54(6), pages 1461-1481, November.
    4. Hildenbrand, Werner, 1983. "On the "Law of Demand."," Econometrica, Econometric Society, vol. 51(4), pages 997-1019, July.
    5. Polterovich, Victor & Mityushin, Leonid, 1978. "Criteria for Monotonicity of Demand Functions," MPRA Paper 20097, University Library of Munich, Germany.
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    Cited by:

    1. Antonio Villar, 1994. "Existence and efficiency of equilibrium in economics with increasing returns to scale: an exposition," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 205-243, May.
    2. Basci, Erdem & Erdogan, Ayse M. & Saglam, Ismail, 2006. "Money, Tobin Effect, and Incerasing Returns," MPRA Paper 1904, University Library of Munich, Germany.
    3. David, Laurent & Le Breton, Michel & Merillon, Olivier, 2007. "Kolm as a Contributor to Public Utility Pricing, Second Best Culture and the Theory of Regulation," IDEI Working Papers 490, Institut d'Économie Industrielle (IDEI), Toulouse.
    4. M. Ali Khan, 2007. "Perfect Competition," PIDE-Working Papers 2007:15, Pakistan Institute of Development Economics.
    5. Nur Ata, H. & Basci, Erdem, 2004. "Existence of competitive equilibrium under financial constraints and increasing returns," Journal of Economic Dynamics and Control, Elsevier, vol. 28(12), pages 2457-2473, December.
    6. Jean-Marc Bonnisseau & Alexandrine Jamin, 2004. "General equilibrium theory and increasing returns : an alternative to the survival assumption," Cahiers de la Maison des Sciences Economiques b04017, Université Panthéon-Sorbonne (Paris 1).
    7. repec:hal:journl:halshs-00435256 is not listed on IDEAS
    8. repec:hal:journl:halshs-00423875 is not listed on IDEAS

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