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Perfect Competition and Fixed Costs: The Role of the Ownership Structure

Author

Listed:
  • Vincent Boitier

    (GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université)

Abstract

It is widely considered that a (perfectly) competitive equilibrium cannot survive to the existence of fixed costs because firms generate losses in equilibrium. In this theoretical and methodological article, I demonstrate that this statement is not valid by developing some counter-examples. In particular, I clearly show that a competitive equilibrium and fixed costs are tenable, depending on the ownership structure of models. I then delimit the role of fixed costs in macroeconomic models. Notably, I find that fixed costs can improve the level of aggregate output in the long run.

Suggested Citation

  • Vincent Boitier, 2024. "Perfect Competition and Fixed Costs: The Role of the Ownership Structure," Post-Print hal-05137756, HAL.
    • Handle: RePEc:hal:journl:hal-05137756
    DOI: 10.1515/bejm-2023-0078
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