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Increasing Returns to Scale and Location Theory of the Firm Under Price Uncertainty

This paper shows that it is not appropriate to consider increasing returns to scale in the location theory of the firm, when the production function is assumed to be concave. The paper assumes that the production function is quasi-concave. If the marginal revenue curve cuts through the marginal cost curve from above only once, then comparative static analysis can be applied in the case of increasing returns to scale.

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