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Set-Up Costs and Theory of Exhaustible Resources, and A Note on Set-Up Costs Facing Consumers


  • Hartwick, John M.
  • Kemp, Murray C.
  • Van Long, Ngo


This paper discusses the traditional specification problem from a geometric viewpoint. While the traditional emphasis is on the properties of estimators, the geometric approach also allows an easy development of corresponding results for inference. Errors arising from artificial inclusion or exclusion of variables are considered in terms of augmentations or restrictions on a given maintained hypothesis, and this allows a corresponding interpretation of tests based upon the Wald and Lagrange Multiplier Principles. It is demonstrated that biases arising from incorrect exclusion of variables do not invalidate the traditional F-test.

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  • Hartwick, John M. & Kemp, Murray C. & Van Long, Ngo, 1980. "Set-Up Costs and Theory of Exhaustible Resources, and A Note on Set-Up Costs Facing Consumers," Queen's Institute for Economic Research Discussion Papers 275188, Queen's University - Department of Economics.
  • Handle: RePEc:ags:queddp:275188
    DOI: 10.22004/ag.econ.275188

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    References listed on IDEAS

    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
    2. Brown, Donald J. & Heal, Geoffrey, 1980. "Two-part tariffs, marginal cost pricing and increasing returns in a general equilibrium model," Journal of Public Economics, Elsevier, vol. 13(1), pages 25-49, February.
    3. Arnott, Richard J & Riley, John G, 1977. " Asymmetrical Production Possibilities, the Social Gains from Inequality and the Optimum Town," Scandinavian Journal of Economics, Wiley Blackwell, vol. 79(3), pages 301-311.
    4. Meade, James E, 1974. "The Optimal Balance between Economies of Scale and Variety of Products: An Illustrative Model," Economica, London School of Economics and Political Science, vol. 41(164), pages 359-367, November.
    5. Stern, Nicholas, 1972. "The optimal size of market areas," Journal of Economic Theory, Elsevier, vol. 4(2), pages 154-173, April.
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