The geometry of global production and factor price equalisation
AbstractWe consider a production economy where commodities are partitioned into irreproducible factors and reproducible goods, and the production technologies have constant returns to scale. We examine the geometry of the efficient frontier of the global production set and derive theorems of nonsubstitution type. We complement the geometric viewpoint by an algebraic characterization of the efficient frontier, that put emphasis on the "factors values" of goods. We analyse the connections between the prices of goods and the prices of factors. In particular, we show that if the number of goods is at least twice as large as the number of factors, then, generically, the prices of goods uniquely determine the prices of factors.
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Date of creation: Dec 2006
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constant returns to scale ; global production set ; non-substitution ; factor values ; factor price equalisation;
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"The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why,"
NBER Working Papers
7411, National Bureau of Economic Research, Inc.
- O'Rourke, Kevin H & Williamson, Jeffrey G, 2000. "The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why," CEPR Discussion Papers 2372, C.E.P.R. Discussion Papers.
- O'Rourke, K.H. & Williamson, J.G., 1999. "The Heckscher-Ohlin Model Between 1400 and 2000: When it Explained Factor Price Convergence, Ehen it Did not, and Why," Papers 99/25, College Dublin, Department of Political Economy-.
- Bidard, Christian, 1990. "An Algorithmic Theory of the Choice of Techniques," Econometrica, Econometric Society, vol. 58(4), pages 839-59, July.
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