Three sources of increasing returns to scale

Jinill Kim

No 1997-18, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper reviews various types of increasing returns from a critical perspective. Increasing returns have been introduced in a monopolistic-competition model both at the firm level and at the aggregate level. We show that the degree of the aggregate returns to scale is a linear combination of three return parameters, with the weights determined by the specification of a zero-profit condition. Identification issues are discussed with an emphasis on recent macro literature. We argue that disaggregate data give information on the market structure rather than the technology. Welfare implications explain why it is important to identify various increasing returns.

Keywords: Economies; of; scale (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (10)

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