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The geometry of global production and factor price equalisation

Author

Listed:
  • Ivar Ekeland

    (Canada Research Chair in Mathematical Economics - UBC - University of British Columbia)

  • Roger Guesnerie

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Collège de France - Chaire Théorie économique et organisation sociale - CdF (institution) - Collège de France)

Abstract

We consider a production economy where commodities are partitioned into K irreproducible factors and L reproducible goods, and the production technologies have constant returns to scale. We examine the geometry of the global production set in the space of commodities, and we derive theorems of non-substitution type. We define the "factors values" of the different goods, we use them to characterize the efficient production plans, and we investigate in detail the relations between the prices of goods and the prices of factors. We show that the prices of factors uniquely determine the prices of goods, and that, generically, equalising the prices of 2K goods equalises the prices of factors.

Suggested Citation

  • Ivar Ekeland & Roger Guesnerie, 2010. "The geometry of global production and factor price equalisation," PSE-Ecole d'économie de Paris (Postprint) halshs-00754427, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00754427
    DOI: 10.1016/j.jmateco.2009.11.009
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    References listed on IDEAS

    as
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