Lapan, Harvey E.; Brown, Douglas M.

Southern Economic Journal Vol. 55 no. 2 (October 1988): 374-390.

This paper constructs an equilibrium model of the supply behavior of an industry comprised of utility maximizing owner-operators, and derives its implications for empirical work. Except for the case of long-run constant costs, the perverse results for the firm (a backwar d-bending labor supply curve for the entrepreneur may lead to a negatively-sloped product supply curve and positively-sloped input demand curve) carry through to the industry. New results include the finding that, under increasing costs, a rise in entry costs can lead to a fall in price, even when the entrepreneur's labor supply curve is upward sloping.