Industry Equilibrium Under Price Distribution and Cost Shifts

David Hennessy

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

Abstract: Using a reference utility entry and exit criterion, we consider an equilibrium model of production where market price is random but endogenous with respect to industry output. General conditions are identified for industry output to increase under shifts in costs and in the distribution of demand. Comparative statics of firm level production and farm numbers are also studied. Results confirm the intuition that improvements in cost and demand conditions increase industry production. However, firm level responses are not as intuitive, and depend upon the relationship between the source of disturbance and the compensation through the altered distribution of output price.

Date: 1998-01-01
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Published in Journal of Economics and Business 1998, vol. 50 no. 3, pp. 509-523

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Journal Article: Industry equilibrium under price distribution and cost shifts (1998)
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