Convexity, concavity, super-additivity, and sub-additivity of cost function without fixed cost

Tanaka, Yasuhito and Hattori, Masahiko (2017): Convexity, concavity, super-additivity, and sub-additivity of cost function without fixed cost.

Abstract

With zero fixed cost, convexity of a cost function implies super-additivity, and concavity of a cost function implies sub-additivity. But converse relations do not hold. However, in addition to the zero fixed cost condition we put the following assumption.

(1) If a cost function is convex in some interval, it is convex throughout the domain. (2) If a cost function is concave in some interval, it is concave throughout the domain.

Then, super-additivity implies convexity and sub-additivity implies concavity. Subsequently, super-additivity and convexity are equivalent, and sub-additivity and concavity are equivalent.

• Item Type: MPRA Paper
• Language: English
• Keywords: cost function, convexity, concavity, super-additivity, sub-additivity
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets

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