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Questions tagged [theory-of-the-firm]

The tag has no usage guidance.

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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 ...
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1answer
54 views

What am I doing wrong in the derivation of Bass diffusion model?

I've been deriving Bass diffusion model and keep consistently finding a different result than Bass' original answer. To make things worse, every single link in the Google results page just copies the ...
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Competitive Market - Production & Number of Firms

The question is as follows: The inverse market demand for provision of gas services is given by p(y) = 1/(1+y), where p is the unit price and y measures output in appropriately scaled units. Suppose ...
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How can perfectly competitive firms earn zero profits?

Consider a firm that chooses the quantity of labour $L$ to hire which maximises its profits. As usual, we suppose that output $Y$ is increasing in $L$ but at a strictly decreasing rate; and for ...
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1answer
167 views

Revenue maximization

We have two firms with identical cost structure compete in a market Demand function = $p=a-bq$ And $q=q_1+q_2$ They are identical in every way. However, firm 1 maximizes profit and firm 2 ...
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Are corporations free market on the outside and communist dictatorships on the inside?

See why we hate working for big companies What do you think of the proposition that Modern capitalism raises the flag of the free market while pitting centrally planned organisations against each ...
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Can I use my (preliminary) findings to motivate a study

I have to motivate a study of subcontracting in India. Most papers find that subcontracting intensity is increasing in most countries, whereas I find (through preliminary investigation) that ...
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2answers
140 views

Why is the long-run average production cost not necessarily the same as the minimum average total cost?

As you can see from the graph, the LRATC doesn't touch the SRATC curves when they're at their minimum. Why is this so?
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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?...
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How is the “value added” of firms distributed

While it can be justified that the sales (or revenues) of firms in an industry follow a Pareto-distribution, I wonder how the value added (sales minus input costs minus taxes, excluding depreciation) ...