Mrs. Robinson revisited
In an analysis of supply, Joan Robinson in her book, The Economics of Imperfect Competition, digresses first on the concept of rent to a heterogeneous resource, and secondly on the four cost curves of an industry. This study re-examines these digressions and seeks to provide the student of economics with a clearer understanding and appreciation of the tools Robinson uses, but at the same time it expands the analysis into additional situations faced by competitive firms.
In the digression on rent, recognizing the use of marginal analysis in the application of a variable resource with a variable heterogeneous resource in the production of a product, this study finds that the price per efficiency unit of a quality is not limited by the price per efficiency unit of other qualities of the resource. It is the relative supply and demand for a quality that determines the price per efficiency unit of the quality and, therefore, the quality economic rent.
In the digression on four cost curves, the cost curves of industries under conditions of scarcity and/or economies of large-scale industry are examined. Of the four cost curves the industry faces (i.e., average cost excluding rent, marginal cost excluding rent, average cost including rent, and marginal cost including rent), it is the long-run average cost including rent, as Robinson proposed, that represents the competitive industry's long-run supply curve. Economies and scarcity only serve to change the shape of this supply curve.