Abstract
The Copes model, where an open access market is expected to result in nonoptimal levels of capacity and output, is demonstrated to be applicable where there is simultaneity of production and sale of output. Particular reference is made to the service sector, where customers are regarded as necessary inputs into the production activity of a service sector firm and as necessary for sales (output) of the firm to occur. It is further shown that the criticisms of the Copes Model leveled by Gordon and Stegman in terms of market rent, the nature of the free entry supply curve, and the equilibrating role of price do not hold in our analysis of service sector activities.
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