On the Degree of Scale Economies when Firms Make Technology Choice

Koji Shintaku

MPRA Paper from University Library of Munich, Germany

Abstract: We construct a simple model to demonstrate how the firm-level degree of scale economies (D-SE) is determined when firms make technology choice. In particular, we illustrate the importance of external factors that affect the efficiency of firms' technology choice, such as public knowledge stock, when determining D-SE. A change in public knowledge stock affects D-SE both directly and indirectly through a change in the firm's output. When output is endogenized in a monopolistic competition model with a variable mark-up rate, an increase in public knowledge stock raises D-SE through technology choice if the mark-up rate is increasing in output.

Keywords: Degree of scale economies; Technology choice; Public knowledge stock; Variable mark-up rate. (search for similar items in EconPapers)
JEL-codes: D21 D24 F10 F12 L11 L16 (search for similar items in EconPapers)
Date: 2017-09-06
New Economics Papers: this item is included in nep-bec and nep-ind
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