Exchange of goods while investing into production and safety
AbstractThe tradeoff between production and safety investment is scrutinized for two agents who convert resources into production and safety investment while simultaneously exchanging goods voluntarily. We quantify how two Cobb-Douglas parameters, one scaling production versus safety, and the other scaling the relative importance of two goods, impact two agentsâ€™ production, safety effort, incomes, export, import, price, and utilities. An agentâ€™s income from producing a good reaches a maximum for an intermediate value of the Cobb-Douglas parameter that scales the importance of productive effort relative to safety effort. The price of good 2 in terms of good 1, and the agentsâ€™ utilities, depend on both the Cobb Douglas parameters, the productivity parameter, and both agentsâ€™ resources and unit costs of production and safety effort.
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Bibliographic InfoArticle provided by Wroclaw University of Technology, Institute of Organization and Management in its journal Operations Research and Decisions.
Volume (Year): 1 (2013)
Issue (Month): ()
Production; safety; exchange; risk; trade; price.;
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