Exhibit 36.2-3 Increasing Returns to Scale (Convex) Model.
Increasing Returns to Scale (Convex) Model
The exponential model
(S=eαeβX) is an
example of a convex shaped, increasing returns to scale model.
This may apply for price, provided it is represented as 1/P:
$$ S = S_0 e^{-βP}, β>0 $$
Where P is price and S is sales. S0 and β are model parameters.
S0 is the intercept.
The model assumes that the sales response to decreases in
price may exhibit increasing returns to scale.
