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Short-run and long-run marginal costs of joint products inlinear programming

Published online by Cambridge University Press:  17 August 2016

Axel Pierru
Axel Pierru*
Affiliation:
Center for economics and management, IFP School, IFP, 228-232 Avenue Napoléon Bonaparte, 92852 Rueil-Malmaison, France
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Summary

In standard microeconomic theory, short-run and long-run marginal costs areequal for production equipment with adjusted capacity. When the productionof joint products from interdependent equipment is modeled with a linearprogram, this equality is no longer verified. The short-run marginal costthen takes on a left-hand value and a right-hand value which generallydiffer from the long-run marginal cost. In this article, we demonstrate andinterpret the relationship existing between long-run marginal cost andshortrun marginal costs for a given finished product. That relationship issimply expressed as a function of marginal capacity adjustments (determinedin the long run) and marginal values of capacities (determined in the shortrun).

Résumé

Résumé

Dans la théorie microéconomique classique, coût marginal de court terme etcoût marginal de long terme sont égaux pour un équipement à capacitéadaptée. Lorsque l'on modélise par programmation linéaire la fabrication deproduits liés à partir d'équipements interdépendants, cette égalité n'estplus vérifiée. Le coût marginal de court terme prend alors deux valeurs (àgauche et à droite) généralement différentes du coût marginal de long terme.Dans cet article, nous démontrons et interprétons la relation existant alorsentre coût marginal de long terme et coûts marginaux de court terme d'unproduit donné. Celle-ci s'exprime simplement en fonction des ajustementsoptimaux des capacités (déterminés à long terme) et des valorisationsmarginales des capacités (déterminées à court terme).

Keywords

Microeconomicsmarginal costlinear programmingD20C61microéconomiecoût marginalprogrammation linéaireD20C61

Information

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 73 , Issue 2 , 2007 , pp. 153 - 171
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2007 

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Footnotes

*

The author is grateful to an anonymous referee and to Denis Babusiaux for helpful comments.

References

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