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.
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Oi, W.Y. (2018). Fixed Factors. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_400
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DOI: https://doi.org/10.1057/978-1-349-95189-5_400
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