Tag Archives: perfect competition unrealistic

There is actually a fairly well known argument against the existence of decreasing returns to scale. The economist Miles Kimball gives an excellent treatment of the argument on his blog. The argument is also briefly mentioned in some graduate microeconomics textbooks, for example Microeconomic Theory by Mas-Colell and Whinston. The argument goes as follows. SupposeContinue reading “Theoretical arguments against decreasing returns to scale”