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Increasing Returns and Strategic Behavior: The Worker-Firm Ratio

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  • Spyros Vassilaikis

Abstract

This article presents a model of an increasing returns economy in which each agent is allowed to choose his occupation; he can be a worker or an employer. It is shown that as the number of agents increases to infinity, the proportion of employers in the population approaches zero. A large economy can be a competitive economy, a natural oligopoly, or a natural monopoly, depending upon the asymptotic significance of scale economies. Replication does not eliminate the per capita welfare loss due to imperfect competition in the natural oligopoly case. The asymptotic behavior of income per head and its functional distribution are also discussed.

Suggested Citation

  • Spyros Vassilaikis, 1989. "Increasing Returns and Strategic Behavior: The Worker-Firm Ratio," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 622-636, Winter.
  • Handle: RePEc:rje:randje:v:20:y:1989:i:winter:p:622-636
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    Cited by:

    1. Thomas J. Holmes, 1999. "Localization Of Industry And Vertical Disintegration," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 314-325, May.
    2. Berliant, M. & Ten Raa, T., 2003. "Increasing returns to scale and perfect competition : The role of land," Other publications TiSEM c4f1929e-6651-4959-b757-4, Tilburg University, School of Economics and Management.
    3. Berliant, Marcus & ten Raa, Thijs, 2003. "Increasing returns and perfect competition: the role of land," Journal of Urban Economics, Elsevier, vol. 54(2), pages 339-367, September.
    4. Jain, Amit, 2011. "Connaissance, ressources, concurrence et les frontières de l'entreprise," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/6403 edited by Thiétart, Raymond-Alain, October.
    5. Andrew F. Newman, 1991. "The Capital Market," Discussion Papers 951, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Gans, Joshua S., 1998. "Time Lags and Indicative Planning in a Dynamic Model of Industrialization," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 103-130, June.

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