Fixed costs and other economies of scale result in the non-convexity of the production function. To what extent does this affect the traditional welfare theorems? Suppose we convexify the production set P to a set P’. Then traditional welfare theorems go through. Suppose that the (a) resulting equilibrium is in a section of P’ that was locally convex as part of P. Then this equilibrium clearly would exist even in the original situation with P. Thus we retain equilibria that are part of P.

How do we work with fixed costs. Clearly they necessitate – and result in – imperfect (oligopolistic co

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Much of Chandler’s argument is premised, for example, on his casual assertions about the minimum efficient scale of operations for firms in particular industries. But in a detailed review of the literature and concepts surrounding these issues, Scherer and Ross (1990) argue that many ambiguities surround the idea of minimum efficient scale; they summarize considerable empirical evidence that efficiency in an industry is similar over a wide range for firm sizes, and tentatively conclude that actual concentration in U.S. manufacturing industry appears to be considerably higher than the imperatives of scale economies require [ed: and might suggest the role of market and/or political power that size conveys] (p. 141). They note that empirical studies are equivocal as to the economic success of the multidivisional form (Scherer and Ross, 1990, p.105 n. 17), and point out that one of the main exemplars of this form described by Chandler, General Motors, has faced difficulties at least since the 1940s that may be associated wit rigidities of organizational form (Chandler, 1990, pp. 105-106)

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This essay has been on appreciative theorizing. It is my conviction that it is important to get appreciative theory reasonably well worked out, before one gets in the business of building formal theory. Otherwise there are few restraints preventing formal modelling from going amuck, and little that pulls the enterprise towards being about real phenomena. On the other hand, given the existence of a reasonable well worked out appreciative theory, formal theorizing can be a very helpful part of the intellectual enterprise.

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    There is centrally, the problem that the informality of appreciative theorizing makes it difficult to check out the logical completeness and correctness of the 'causal' arguments in that theory. The exercise and discipline of formalizing the arguments can reveal a lot about what is incomplete or problematic in the appreciative causal story. As someone who has played this game a number of times, I can attest that much is learned even before a formal model is fully developed and capable of serving as an analytic engine .....</p>

Current Status: To Investigate

Biblio

• The collapse of complex societies