Fixed cost, variable cost, markups and returns to scale.

This paper derives the structure of a production function which is necessary and sufficient for generating a fixed cost. We extend the classical production function in order to allow each input to have a fixed and a variable part. We characterize and estimates both fixed and variable components of the cost function and studies how fixed and variable costs interact and affect firms' behavior in terms of price setting and returns to scale.

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Year of publication:	2013
Authors:	Chen, Xi ; Koebel, Bertrand M.
Institutions:	Bureau d'Économie Théorique et Appliquée (BETA), Université de Strasbourg
Subject:	identification \| imperfect competition \| returns to scale \| unobserved heterogeneity

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Extent:	application/pdf
Series:	Working Papers of BETA.
Type of publication:	Book / Working Paper
Classification:	O3 - Technological Change; Research and Development
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010696183