The Assembly of Rents

Kwok C. Wong

doi:10.1515/me-2016-0014

Article

The Assembly of Rents

Kwok C. Wong

Published/Copyright: June 1, 2016

Published by

Become an author with De Gruyter Brill

Submit Manuscript Author Information Explore this Subject

From the journal Man and the Economy Volume 3 Issue 1

Abstract

There are fixed costs in production. One has to assemble rents earned in production lines to cover them. There are also fixed costs in consumption. Consumers assemble surpluses to cover them. In either case, rent assemblage could either be a quantity solution, a quality solution, or a combination of both. Once a fixed cost is committed by contract, it becomes historical. Yet compared to the option of paying this fixed cost all over again, increasing those quantities or qualities, which do not further increase this fixed cost, is less costly. The Law of Demand therefore implies the quality and/or the quantity solutions. The quality solution, as provided by the Alchian-Allen Theorem, is but a special case: where an increase in quality is the only viable solution under some specific real world constraints.

Keywords: Rent assembly; consumer surplus; quality; quantity; fixed cost; entrance fee; Alchian–Allen Theorem; Steven Cheung; Economic Explanation

Note

The Chinese version of this paper was presented at the Conference on Economic Explanation, Hang Zhou, China; on November 1^st, 2014. While ideas are mostly Professor Cheung’s, the author is responsible for any mistake and misinterpretation.

Published Online: 2016-6-1

Published in Print: 2016-6-1

You are currently not able to access this content.

Articles in the same Issue

https://doi.org/10.1515/me-2016-0014

Keywords for this article

Rent assembly; consumer surplus; quality; quantity; fixed cost; entrance fee; Alchian–Allen Theorem; Steven Cheung; Economic Explanation