“The presence of fixed costs means that market outcomes can substantially deviate from what is socially optimal. “
Perhaps, but doesn’t it depend on discount rates? P > MC today to cover fixed costs *is* a signal and incentive to make more and better innovations tomorrow. With some positive r this is not inefficient.
“The presence of fixed costs means that market outcomes can substantially deviate from what is socially optimal. “
Perhaps, but doesn’t it depend on discount rates? P > MC today to cover fixed costs *is* a signal and incentive to make more and better innovations tomorrow. With some positive r this is not inefficient.