Strictly convex variable cost does not imply U-shaped average cost

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Abstract

We show that strictly convex variable costs do not imply U-shaped average costs and provide a sufficient condition for U-shaped average costs. As an application we study endogenous entry when firms have market power and they have decreasing average cost but increasing marginal cost.
Lingua originaleEnglish
pagine (da-a)766-770
Numero di pagine5
RivistaDefault journal
Volume70
Stato di pubblicazionePublished - 2016

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Variable cost
Average cost
Endogenous entry
Market power
Marginal cost

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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title = "Strictly convex variable cost does not imply U-shaped average cost",
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AU - Balletta, Luigi

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KW - Convex costs

KW - Economics and Econometrics

KW - Endogenous entry

KW - Fixed costs

KW - U-shaped average costs

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