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ECONOMIES OF SCALE AND ENTRY IN SPATIAL MARKETS
Author(s) -
Claycombe Richard J.
Publication year - 1990
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1990.tb00097.x
Subject(s) - economies of scale , simplicity , economics , welfare , function (biology) , scale (ratio) , short run , econometrics , microeconomics , market economy , geography , philosophy , cartography , epistemology , evolutionary biology , biology
For the purposes of simplicity, short‐run cost functions are widely used in spatial markets literature, even when the long‐run effects of entry are in question. In this paper, I show that if a long‐run cost function is incorporated into a Löschian model, counter‐intuitive and novel performance characteristics can result. Under some circumstances welfare per area can decrease as cost levels decrease.