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

Boitier Vincent ()
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Boitier Vincent: Le Mans University, Le Mans, France

The B.E. Journal of Macroeconomics, 2024, vol. 24, issue 1, 187-206

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.

Keywords: competitive equilibrium; fixed costs; ownership structure; survival assumption (search for similar items in EconPapers)
JEL-codes: B10 B40 E13 E20 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejm-2023-0078

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