Questions tagged [firm]

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8
votes
1answer
59 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 ...
6
votes
1answer
124 views

Empirical ranking of firms based on productivity

I want to rank firms based on a metric, let's call it productivity. Theoretically, this firm productivity measure may be well defined. Empirically, however, data that account for all dimensions of ...
6
votes
5answers
219 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, ...
4
votes
3answers
1k 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 ...
4
votes
2answers
78 views

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 ...
4
votes
1answer
72 views

Distribution of firm sizes and firm age

What are public sources for US firm/plant sizes, in order to characterize the firm size distribution? And what are stylized facts about the firm size distribution: What does it approximate to? ...
3
votes
2answers
177 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. ...
3
votes
1answer
46 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 ...
3
votes
1answer
42 views

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 ...
2
votes
2answers
343 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 ...
2
votes
2answers
5k 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 ...
2
votes
2answers
2k views

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 ...
2
votes
2answers
285 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 ...
2
votes
1answer
81 views

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 ...
2
votes
0answers
25 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
1answer
34 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 ...
1
vote
2answers
25 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 ...
1
vote
1answer
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, ...
1
vote
1answer
1k views

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
vote
1answer
434 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 ...
1
vote
1answer
40 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 ...
1
vote
1answer
1k 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 ...
1
vote
1answer
748 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)?
1
vote
1answer
97 views

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 ...
1
vote
0answers
25 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) ...
1
vote
0answers
18 views

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 ...
1
vote
1answer
3k views

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 ...
1
vote
0answers
21 views

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?...
1
vote
0answers
29 views

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 ...
1
vote
0answers
13 views

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 ...
0
votes
1answer
146 views

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/...
0
votes
1answer
20 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 ...
0
votes
1answer
18 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. ...
0
votes
1answer
26 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. -...
0
votes
0answers
139 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 ...
-1
votes
1answer
549 views

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 (...
-2
votes
1answer
128 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, ...