Mrs. Robinson's Cost Curves, Mr. Ricardo's Rent, and Professor Marshall's Bounties and Taxes

12 Pages Posted: 11 Mar 2015

See all articles by John F. McDonald

John F. McDonald

University of Illinois at Chicago

Date Written: March 9, 2015

Abstract

A major issue raised by Alfred Marshall is whether competitive industries are subject to increasing or decreasing returns in the long run. If variations from constant returns exist, what are the causes, and is competitive output efficient? In competitive output is not efficient, what policies can be used to achieve market efficiency? As Joan Robinson pointed out, these questions boil down to the nature of industry long-run cost curves. The purpose of this paper is to provide an analysis of these issues that is simple and yet complex enough to explore the different outcomes that can exist.

Keywords: Competitive industry costs, Ricardian rent, Bounties, Pigouvian taxes

JEL Classification: D41, B21, D62

Suggested Citation

McDonald, John F., Mrs. Robinson's Cost Curves, Mr. Ricardo's Rent, and Professor Marshall's Bounties and Taxes (March 9, 2015). Available at SSRN: https://ssrn.com/abstract=2575722 or http://dx.doi.org/10.2139/ssrn.2575722

John F. McDonald (Contact Author)

University of Illinois at Chicago ( email )

Chicago, IL 60605
United States
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