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Infinitesimal Firms and Increasing Cost Industries

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  • Richard M. Peck

Abstract

This article presents a rigorous version of the basic model of an increasing-cost competitive industry found in many textbooks. In the model, firms are infinitesimal, which justifies price-taking behavior and a continuous industry supply curve. The industry supply curve slopes upward because of dispersion in the efficiency of firms. In this framework, the authors emphasize the role of the marginal firm. This role is not clearly emphasized in many textbook presentations of the increasing cost industry.

Suggested Citation

  • Richard M. Peck, 2001. "Infinitesimal Firms and Increasing Cost Industries," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(1), pages 41-52, January.
  • Handle: RePEc:taf:jeduce:v:32:y:2001:i:1:p:41-52
    DOI: 10.1080/00220480109595169
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    References listed on IDEAS

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    1. Hildenbrand, W. & Kirman, A. P., 1976. "Introduction to Equilibrium Analysis," Elsevier Monographs, Elsevier, edition 1, number 9780720436068 edited by Bliss, C. J. & Intriligator, M. D..
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