Template-type: ReDif-Paper 1.0
Author-Name: Letterie Wilko 
Author-Name: Nilsen Øivind A. 
Author-Name: Pfann Gerard 
Author-workplace-name: METEOR
Title: Interrelated Factor Demand with Nonconvex Adjustment Costs: a Note
Abstract: In this paper we develop a model to describe a firm’s demand for two production factors which is subject to the presence of nonconvex adjustment costs. In our model simultaneous adjustment of these two production factors may either increase or decrease the total costs incurred by the firm. The magnitude of this change in total costs ultimately determines the likelihood of joint adjustment. We also show that the importance of interrelation is suppressed by large fixed costs.
Keywords: Economics (Jel: A)
Series: Research Memoranda
Creation-Date: 2008
Number: 002
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:2bf5167a-b7ae-40e0-994e-f64a0f79efb5/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 76025
Handle: RePEc:unm:umamet:2008002