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Applied Economics Letters Volume 17, 2010 - Issue 7
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Original Articles

Fixed cost efficiency with infinitesimal competitors

Linus Wilson Department of Economics and Finance, University of Louisiana at Lafayette, B. I. Moody III College of Business, 214 Hebrard Boulevard, Moody Hall 326, PO Box 44570, Lafayette, LA, 70504-4570, USA E-mail: [email protected]
Pages 667-671 | Published online: 20 Oct 2008
 
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Abstract

Suppose that infinitesimal firms have identical variable costs, but there is heterogeneity in their fixed costs. Regardless of the ordering of entry and exit, fixed costs will be minimized for a given industry size.

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