Questions tagged [firm]
The firm tag has no usage guidance.
52
questions
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How do the assumptions $p'+q_ip''<0$ and $p'-c''<0$ ensure the stability of the Nash equilibrium among private firms in basic mixed oligopoly model?
I have two quick question regarding basic oligopoly models:
What is meant by we impose the assumptions to $p'+q_ip''<0$ and $p'-c''<0$ to ensure the stability of the Nash equilibrium among ...
- 21
0
votes
0
answers
20
views
company value, shares, NPV
Let's say we want to evaluate the value of a company. One way is to calculate the present value of the cash flows. I do not specify the cash flows and the discounting rates $r_i$ here. Then the ...
- 256
1
vote
1
answer
25
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Factor changes in Melitz (2003) model
What would be the effect of changes in factor supplies, for example labor, on the open economy equilibrium?
- 1,781
0
votes
1
answer
23
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Stock Exchange role in expansion of firms
How can a Stock Exchange be proven important in developing/developed economies regarding the expansion of firms? Are there some constraints of the Stock Exchange in the development of firms?
user43401
1
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1
answer
216
views
How to find cost function from leontief production
I saw the same type of questions are asked for that but I am new at this subject so I couldn't grasp it totally.
so basically for that production function:
$$
f(x_1,x_2) = min \{ 2x_1 +x_2 , x_1 +2x_2 ...
- 121
2
votes
1
answer
114
views
What's the difference between economies of scale and increasing returns to scale?
Can anyone tell me the difference between economies of scale and increasing returns to scale. It seems to me that observationally they would be equivalent.
- 321
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vote
2
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65
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Companies mutually owning each other
There is no logical flaw in having two companies A and B mutually owning each other. Company A may hold X% of the shares of company B, and company B may hold Y% of the shares of company A. I assume ...
1
vote
2
answers
45
views
Companies database with strange negative values, are they reasonable from an economic point of view?
I have a dataset of US firms (around 6500 in total) containing time series of:
Sales (191 negative observations corresponding to 0.0351% of total observations)
Liabilities (70 negative observations ...
- 111
3
votes
0
answers
51
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Structural Estimation, Simulations, and Initial Values
I want to estimate model parameters and fear about the impact of initial values of simulations.
Short model overview
Consider a firm producing a homogeneous output good whose output price, $P_t$, is $...
- 313
1
vote
1
answer
37
views
Proximity-concentration hypothesis: homogeneous firms and symmetric countries
Hi everyone I am running into a stone wall and don't seem to be able to solve this, can someone show me the steps how I can insert 1 into 2 and get 3.
$B=\frac{f_E+f_D}{φ^{(σ−1)}*(1+τ^{(1-σ)})}$
$π =...
- 13
3
votes
0
answers
220
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Arellano and Bond (1991) GMM estimation in R by using plm package
I am a last-year student at university, currently working on my Bachelor's (so still learning R), and I really hope that you would suggest a potential solution (even if to use Python).
So, the main ...
- 109
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vote
0
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28
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Educating workers (micro model)
Would someone be able to check my solutions to this basic problem? This is a practice test with no solutions provided, and I have no idea if I am going in the right direction.
Problem:
https://ibb.co/...
- 11
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votes
1
answer
146
views
Unbalanced panel data in prodest package in R
I have a question regarding the usage of unbalanced panel data for TFP estimation by using the prodest package.
The dataset could be found here: https://drive.google.com/file/d/...
- 109
2
votes
0
answers
383
views
Arellano and Bond (1991) or Blundell and Bond (1998) in R estimation
I have the following problem with the Arellano and Bond (1991) or Blundell and Bond (1998) estimators in R using the plm package. I receive the following problem when trying to run the needed ...
- 109
5
votes
1
answer
4k
views
Is it true that if marginal cost is constant, then average variable cost is also constant and equals marginal cost?
I'm inclined to think yes because marginal cost only depends on variable cost (fixed costs don't matter), but I'm not 100% certain.
Basically, my thought process is that marginal cost of producing one ...
- 207
1
vote
2
answers
266
views
Where does investment originate from in the circular flow model?
The above image is from my macroeconomics textbook.
I’m struggling to understand the “financial markets” corner. If financial markets refers to banking and perhaps the stock market, is it true that ...
- 115
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vote
1
answer
38
views
Measurement for the downstream use of a commodity
I am looking to find a measurement that would tell me the size of the market of the downstream use of some particular commodity. For example, salt or wheat would be used by many companies downstream. ...
- 13
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votes
0
answers
27
views
Reason for SMEs in the European Union employing the bulk of people?
Is there any specific reason why SMEs in the European Union employ the vast majority of people in general as well as in certain industries? Are they exempt from certain regulatory burdens such as ...
1
vote
1
answer
135
views
Measuring productivity with the Törnqvist index
I have a sample of companies, of which I want to calculate the productivity of each individual firm relative to a hypothetical firm in the industry.
Choosing the measurement method was not easy, but ...
- 11
1
vote
0
answers
27
views
What does the elasticity say about the fraction of total cost used on input 1?
A firm have the following production function
$$
y=x_{1}^{\alpha} x_{2}^{1-\alpha}, \quad 0< \alpha < 1
$$
$w_1>0$ is the cost of input 1 and $w_2 > 0$ is the cost of input 2.
(1.1) ...
- 155
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votes
1
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30
views
Question regarding couple economic terms and concepts
I am trying to read some economic articles for future use.
However, as a statistics major student, I am quite unfamiliar with couple of economic vocabs and concepts. Followings are the very vocabs.
-...
8
votes
1
answer
77
views
Perfect Substitution with a Continuum of goods?
Imagine I have a continuum of different goods indexed by $\omega \in [0,1]$. I have a household which consumes a quantity $C(\omega)$ of good $\omega$, and pays a price $P(\omega)$. The household has ...
- 203
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votes
1
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24
views
Measure of New Firms Born in Each Period
In an economy with stochastic overlapping generations of firms, how do we easily understand the measure of new firms born?
The set-up states:
"In each period, measure $\rho\in(0,1)$ of new firms are ...
- 1,179
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votes
2
answers
5k
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Stackelberg with 3 firms
I'm currently trying to solve the following problem:
Stackelberg with 3 firms Imagine there are three firms on a monopolistically competitive
market. The marginal cost of produc- tion in each ...
- 303
3
votes
1
answer
64
views
Why do some perfectly competitive, loss-making firms shutdown and others don't?
Question:
Why do perfectly competitive, loss-making firms that have (AC>AVC>AR) shutdown but
Firms that have (AC>AR>AVC) not shutdown?
-Both of these types of firms are making a loss. How is it ...
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-2
votes
1
answer
178
views
Changing Constant Factor Demands
I’ve been given this true false question: Consider the minimization of wL + rK given F(K, L) $\geq$ Q with F(K, L) strictly increasing in K and L. The conditional factor demands K*(Q, w, r) and L*(Q, ...
- 101
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361
views
Profit Maximization and Returns to Scale
Assume a labor-intensive production function:
$Q(L)=L^\beta$
Find demand of labor that maximizes profits (unconditional demand $L(p,w,r)$), the demand of labor that minimizes costs (unconditional ...
2
votes
2
answers
844
views
Best Response Functions for Cournot
For a Cournot Duopoly game with Linear Demand functions, we need to find the optimal quantity of each firm such that profit is maximised. Given the linearity of the Demand curves, we will obtain a ...
- 401
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votes
2
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462
views
Do the three ways of measuring producer’s surplus give the same result?
In the Firm supply chapter of the microeconomics Varian's book, they show "three equivalent ways to measure producer’s surplus" using marginal cost, average cost and the average variable cost curves.
...
- 269
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21
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To the following data, what kind of econometric analysis can be conducted/ or what type of relationship can be established? [closed]
I have data for sale in petroleum products across different states in India of both public sector and private sector companies for past 10 years.
No. of years - 2008 to 2018 monthly data for 10 years
...
- 11
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votes
5
answers
297
views
Why do firms losing money almost always reduce labor costs via layoffs instead of pay cuts?
At least in the United States, firms seem to almost always reduce labor costs via layoffs rather than pay cuts. Pay cuts are so rare that they're literally headline news. From an economic standpoint, ...
- 760
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votes
2
answers
377
views
Using metrics provided by FRED to identify the business cycle
I am interested to see how the "business cycle" is associated with our firms sales. The hope is that if we can show that our sales line up with the business cycle then we can make decisions ...
- 73
3
votes
1
answer
45
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I'm studying the effect of a law on a sector: how do I select the control group?
I'm planning on using a regression discontinuity design (RDD) to estimate the impact of a sector-specific law on the firms in that sector. I need to create a control group and I have read somewhere in ...
- 39
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1
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183
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Graduate level texts/notes that cover the Short Run and Long Run Costs of firms' production
In undergrad econ we learned that it would cost a firm more money to increase its production in short term than in long term.
MWG does not seem to cover this topic. I need a Graduate level texts/...
- 1,796
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1
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5k
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Why is ATC tangent to Demand in a Monopolistic or Mopolistically Competitive Firm Making Zero Profit?
I understand that the Average Total Cost is equivalent to demand in a zero profiting monopoly or monopolistically competitive firm in order for there to be zero profits (when ATC = P at a given ...
- 13
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vote
1
answer
2k
views
Optimal production level for a typical firm in long-run
Assuming all firms have identical cost functions. Now suppose there is an increasing shift in the demand curve. As we all know that for increasing costs case, both average costs (AC) and marginal ...
- 93
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1
answer
31
views
How are assets distributed by types of organisations? [closed]
How wealth, assets or capital (measured in terms of revenues, assets, equity, etc.) is distributed among the various types of organizations (e.g. State, public companies, private conpanies, ...
- 190
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0
answers
21
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Microeconomics and management science of professional open source companies?
Are there research (and stories more broadly) about professional open source companies? To what types of products their are appropriate, what licensing schemes to choose? How to managed patents and IP?...
- 425
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0
answers
39
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How to model cooperatives
My understanding is that standard models in economics assume the firm is a capitalistic firm, in the sense that it pay workers a wage but no profits. (is that right?)
I am interested in modeling ...
- 8,552
2
votes
2
answers
7k
views
Is the marginal cost the same for every firm in a perfectly competitive market?
Spin-off from: market equilibrium quantity $\ne$ firm profit maximising quantity?
Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit ...
- 360
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vote
1
answer
829
views
market equilibrium quantity $\ne$ firm profit maximising quantity?
Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below:
I guess any firm in the market would ...
- 360
1
vote
1
answer
41
views
What is the difference between knowledge-based and R&D?
So far, I always thought that knowledge-based companies and R&D companies were the same. But recently our TA mentioned that they are different, I've searched a lot to find the differences between ...
- 113
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1
answer
808
views
University course references for Market Structure/Industrial Organization
Are there any books that are used in University-level courses that contain a detailed analysis of market structure ( Perfect competition , Monopoly and so on)?
- 11
-1
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1
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588
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How to determine the marginal product for the following question? [closed]
Suppose that a firm has a Fixed cost of 10,000 dollars and Total Cost of 10,500 dollars for one unit and 11,100 dollars for two units of output. Which of the following is true for the Marginal Cost (...
- 145
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1
answer
103
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Causes of interlocking directorship connections between firms
I need to interpret some empirical results telling me that firms (intended as profit-maximising entities) prefer to be controlled (e.g. through interlocking directorships) by smaller and less ...
- 426
2
votes
1
answer
100
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Academic paper which justifies why companies are run better privately
A few years ago I was reading The Economist and I remember it stated a particular academic paper that underpinned the rationale for the existence of private equity firms. I have tried to find this ...
- 659
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1
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2k
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Duality of cost minimization and profit maximization
The firm tries to maximize profits $\Pi$
\begin{align}
\max_{K,L}\{\Pi(K,L) = F(K,L) - RK - wL\}
\end{align}
where $F$ is the linear homogeneous production function, $R$ the rental rate of capital $K$...
- 1,559
4
votes
3
answers
2k
views
Examples of how economists come up with a production function for a firm?
I am a young man studying economics on his own. In every microeconomics text I find, they teach you what a production function is, but they never show examples (or practice problems) on how one comes ...
- 41
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0
answers
15
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Ranking Sectors Based on "Inclusiveness", greater variance among sectors with less firms
I am trying to rank sectors in Serbia based on how "inclusive" they are in their development, i.e. I have some indicators such as "share of profitable firms within sector", "share of exporting firms ...
4
votes
2
answers
82
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Literature / Evidence on Cash Hoarding of Firms
I have received anecdotal evidence (heard stories) about many firms hoarding cash (liquid assets) post 2008 and not spending it despite availability of many projects with positive NPV. However, when I ...
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