A note on input congestion
Journal article, Peer reviewed
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OriginalversjonEconomics Letters. 2013, 120 (3), 599-602. 10.1016/j.econlet.2013.06.021
The notion of effective space is introduced, and input congestion is explained by economic activities’ exhaustion of effective space. In this setting, I show that profit maximization is inconsistent with input congestion at the firm level, but not necessarily with input congestion at the industry level, when effective space is shared among producers.