For each unit originally manufactured at a marginal cost
of mc, the proportion that will need to be repaired or replaced is (1 - R), and the cost per unit of doing so is z mc.
For developed countries, financial markets are presumably thicker and more efficient, which would suggest that financial constraints may be less important for firms in developed countries, which would imply fewer firms facing increasing marginal costs
. However, as shown in Midrigan and Xu (2014), even countries with sophisticated financial markets such as South Korea face financial frictions that significantly impact firm investment choices related to technology adoption and market entry.
are continuous and strictly increasing.
Theoretical models can be classified according to two different principles: the model of marginal cost
(MC) and the model of full cost (FC).
Thus, residential and commercial customers in the United States may already be facing prices that are above social marginal cost
. This illustrates the importance of accounting for pre-existing distortions when designing carbon taxes and other policies.
Similarly to Giokas (1997), we also employ a combination of two models (stages) to determine a supplier's marginal cost
. As mentioned above, our approach is based on the fact that e-RA bids reveal some information about the suppliers' marginal costs
(Zhang and Jin 2007), which may enhance the knowledge base of marginal costs
beyond that introduced in previous research.
It is needed to point out that in Section 3, the allocation results of output and the water supply for two firms are obtained on the condition that the marginal cost
information of two firms is common knowledge; that is, one firm knows the exact marginal cost
of the opposite firm, which strictly restricts the applicable area of the game model established in Section 3 under the setting of complete information.
In this section, static marginal costs
that do not depend upon the level of technology implementation are assumed.
Many oil analysts include tax and revenue requirements in their estimate of marginal costs
on the grounds that OPEC producers and other states need certain minimum prices and revenues to balance their budgets and avoid social unrest.
The majority of ministers wishes to relax the Commission's proposal in order to be able to apply tariffs that are higher than marginal costs
. Belgium has pointed out that this balance will be difficult to strike and believes that exceptions must be laid down.
Allowance prices reflect to some degree the aggregate marginal cost
of reductions as estimated by the models.
This can be accomplished by denying a rival firm sales which otherwise would insure its survival or reduce its marginal costs