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ANTONIO TESORIERE

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

  • Authors: Balletta, L.; Tesoriere, A.
  • Publication year: 2016
  • Type: Articolo in rivista (Articolo in rivista)
  • Key words: Convex costs; Endogenous entry; Fixed costs; U-shaped average costs; Economics and Econometrics
  • OA Link: http://hdl.handle.net/10447/230957

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.