Strictly convex variable cost does not imply U-shaped average cost

Luigi Balletta and Antonio Tesoriere

Research in Economics, 2016, vol. 70, issue 4, 766-770

Abstract: We show that strictly convex variable costs do not imply U-shaped average costs and provide a sufficient condition for U-shaped average costs. As an application we study endogenous entry when firms have market power and they have decreasing average cost but increasing marginal cost.

Keywords: Convex costs; Fixed costs; U-shaped average costs; Endogenous entry (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:70:y:2016:i:4:p:766-770

DOI: 10.1016/j.rie.2016.05.002

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