Utility Maximization, Individual Production and Market Equilibrium

Harvey Lapan and Douglas M. Brown

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper constructs an equilibrium model of the supply behavior of an industry comprised of utility maximizing owner-operators, and derives its implications for empirical work. Except for the case of long-run constant costs, the perverse results for the firm (a backwar d-bending labor supply curve for the entrepreneur may lead to a negatively-sloped product supply curve and positively-sloped input demand curve) carry through to the industry. New results include the finding that, under increasing costs, a rise in entry costs can lead to a fall in price, even when the entrepreneur's labor supply curve is upward sloping.

Date: 1988-10-01
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Published in Southern Economic Journal, October 1988, vol. 55 no. 2, pp. 374-390

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10815

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