The Balancing Off of Time Preference and Increasing Returns to Scale in Expanding Capacity

John Hartwick

Working Paper from Economics Department, Queen's University

Abstract: The marginal condition indicating whether it is optimal to expand capacity at time t or t+1 is used to examine characteristics of optimal investment programs for cases of economies of scale. A case where the interval between consecutive investments approaches a geometric rate is derived. The previously unexplored case where the costs of adding capacity have a fixed and variable component is analyzed and new comparative static results are noted.

Pages: 25
Date: 1976
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:238

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