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Increasing Returns to Scale and Location Theory of the Firm Under Price Uncertainty

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  • Yeung-nan Shieh

Abstract

This paper shows that it is not appropriate to consider increasing returns to scale in the location theory of the firm, when the production function is assumed to be concave. The paper assumes that the production function is quasi-concave. If the marginal revenue curve cuts through the marginal cost curve from above only once, then comparative static analysis can be applied in the case of increasing returns to scale.

Suggested Citation

  • Yeung-nan Shieh, 1987. "Increasing Returns to Scale and Location Theory of the Firm Under Price Uncertainty," Urban Studies, Urban Studies Journal Limited, vol. 24(2), pages 163-166, April.
    • Handle: RePEc:sae:urbstu:v:24:y:1987:i:2:p:163-166
    DOI: 10.1080/713703866
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    References listed on IDEAS

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    1. Leland, Hayne E, 1972. "Theory of the Firm Facing Uncertain Demand," American Economic Review, American Economic Association, vol. 62(3), pages 278-291, June.
    2. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    3. Coes, Donald V, 1977. "Firm Output and Changes in Uncertainty," American Economic Review, American Economic Association, vol. 67(2), pages 249-251, March.
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    Cited by:

    1. Lin-Ti Tan & Song-Ken Hsu, 2000. "Production Location under Technology Uncertainty," Environment and Planning A, , vol. 32(3), pages 445-454, March.

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