Output frontiers, variable returns to scale and input transfer elasticities
AbstractConvex output set is a common hypothesis in production theory and especially in empirical applications. This often seems to be taken for granted without any reference to returns to scale. However increasing returns to scale have implied a necessary and fundamental revision of general equilibrium theory (see Heal G;1999). This paper focuses on the relation between returns to scale and output frontier shape. We show that output frontier shape for a technology with a fixed input endowment and production functions exhibiting variable returns to scale depends on the difference between relative variation marginal products of production functions. Local concavity or convexity of output frontier are determined through several general, useful formulations : (i)convex combination of partial marginal product elasticities of each production function, which could be shared into partial variable returns to scale level and its returns to scale variability elasticity, (ii) input transfer substitution elasticity between production units, or its inverse, (iii) input transfer marginal product elasticity. When returns to scale are non-variable, these formulations determine output frontier shape, not only locally but on the whole definition domain. These results, based only on technical characteristics of technology without market intervention, should help research, not only on output frontier, but also concerning equilibria between consumption and production, when production activities exhibit variable returns to scale --because an efficient equilibrium, if it exists, postulates a solution on the output frontier.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of Liège Faculty of Econonomics, Management and Social Sciences Department of Economics Service of International and Interregional Economics in its series SEII Working Papers with number 010603.
Date of creation: May 2001
Date of revision:
Contact details of provider:
Postal: Boulevard du Rectorat, 7 (B31-b9) 4000 Liège (Sart-Tilman) Belgium
Web page: http://www.egss.ulg.ac.be/EconomieInternationale
More information through EDIRC
output; frontier; production function; variable; returns to scale; input; transfer; elasticities; frontière; production; économies d'échelle; rendements croissants;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jules Gazon).
If references are entirely missing, you can add them using this form.