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

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

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Abstract: 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.

Date: 2024-04-30
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Published in B.E. Journal of Macroeconomics, 2024, 24 (1), pp.187-206. ⟨10.1515/bejm-2023-0078⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05137756

DOI: 10.1515/bejm-2023-0078

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