Supply curves may be convex – ECB paper

ecb-frankfurt

Industries’ supply curves may not be linear but convex, a working paper published by the European Central Bank says.

In Convex supply curves, Christoph Boehm and Nitya Pandalai-Nayar present evidence that supply curves vary according to how much an industry is using its capacity. The authors use data from a Federal Reserve survey of all large US manufacturing industries from 1972 to 2011.

At low levels of capacity utilisation, supply curves may be flat, the authors say. But this changes as

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