The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Fixed Factors

  • Walter Y. Oi
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_400

Abstract

Small firms invest relatively less in custom-made machines and specifically trained employees. The overhead costs of fixed-capital assets are relatively larger for big firms that engage in the volume production of standardized products. Large firms also incur higher fixed employment costs to recruit and train a specialized workforce. Workers in large firms are paid higher wages designed to reduce labour turnover rates. These phenomena could not be explained without a formal analysis of fixed and quasi-fixed factors. A continuum of degrees of fixity makes for a richer theory of factor markets than a dichotomy of fixed versus variable factors.

Keywords

Amortization Barriers to entry Clark, J. M. Elasticity of substitution Firm size Firm-specific factors Fixed factors Human capital Implicit contracts Labour as a quasifixed factor Labour market search Labour markets contracts Monitoring costs Overhead costs Rationing Shadow price Specialization Substitutes and complements Training Wage differentials 

JEL Classifications

D5 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Walter Y. Oi
    • 1
  1. 1.