Scissors or Horizon: Neoclassical Debates about Returns to Scale, Costs, and Long-Run Supply, 1926-1942
Author(s)
Aslanbeigui, Nahid; Naples, Michele I.
Abstract
The debates about returns to scale, costs and long-run supply spanning from 1926-1942 resulted in the articulation of the relationship between industry supply and firm costs under perfect competition and the development of U-shaped cost curves. It is argued that consistency requires constant costs but firm employment, production and factor incomes remain theoretically indeterminate. Consequently, large firms will likely undermine perfect competition.
