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A note on input congestion

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  • Rødseth, Kenneth Løvold

Abstract

The notion of effective space is introduced, and input congestion is explained by economic activities’ exhaustion of effective space. In this setting, I show that profit maximization is inconsistent with input congestion at the firm level, but not necessarily with input congestion at the industry level, when effective space is shared among producers.

Suggested Citation

  • Rødseth, Kenneth Løvold, 2013. "A note on input congestion," Economics Letters, Elsevier, vol. 120(3), pages 599-602.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:599-602
    DOI: 10.1016/j.econlet.2013.06.021
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    References listed on IDEAS

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    7. Kuosmanen, Timo & Kortelainen, Mika & Sipiläinen, Timo & Cherchye, Laurens, 2010. "Firm and industry level profit efficiency analysis using absolute and uniform shadow prices," European Journal of Operational Research, Elsevier, vol. 202(2), pages 584-594, April.
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    More about this item

    Keywords

    Congestion; Firm and industry technologies; Externalities;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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