IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/33829.html
   My bibliography  Save this paper

Market-dependent production set

Author

Listed:
  • Egbert, Henrik
  • Naqvi, Nadeem

Abstract

A country’s production possibility frontier or PPF is defined as the boundary of its economy’s production set in the net output space for a given technology and fixed quantities of primary factors of production. In general equilibrium theory, exogenous changes in technology or primary-factor supplies alter equilibrium prices; however, government-policy induced domestic relative commodity price changes do not alter the shape of an economy’s production set. We show that, under international capital mobility, which is empirically significant, the shape of a country’s production set does, in fact, depend on market forces and this shape can be manipulated by government policy.

Suggested Citation

  • Egbert, Henrik & Naqvi, Nadeem, 2011. "Market-dependent production set," MPRA Paper 33829, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33829
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/33829/1/MPRA_paper_33829.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Vandana Chandra & Nadeem Naqvi, 1997. "Protection and the Shadow Price of Foreign Exchange with Increasing Returns and International Capital Mobility," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 959-967, November.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Alan Blinder, 2010. "Teaching Macro Principles after the Financial Crisis," The Journal of Economic Education, Taylor & Francis Journals, vol. 41(4), pages 385-390, September.
    4. J. Peter Neary, 1995. "Factor Mobility and International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 4-23, November.
    5. Emily J. Blanchard, 2009. "Trade taxes and international investment," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 882-899, August.
    6. Neary, Peter & Ruane, Frances P, 1988. "International Capital Mobility, Shadow Prices, and the Cost of Protection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 571-585, November.
    7. Robert J. Shiller, 2010. "How Should the Financial Crisis Change How We Teach Economics?," The Journal of Economic Education, Taylor & Francis Journals, vol. 41(4), pages 403-409, September.
    8. Peter Neary, 1988. "Tariffs, Quotas, and Voluntary Export Restraints with and without Internationally Mobile Capital," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 714-735, November.
    9. Azariadis, Costas & Pissarides, Christopher A., 2007. "Unemployment dynamics with international capital mobility," European Economic Review, Elsevier, vol. 51(1), pages 27-48, January.
    10. Emily J. Blanchard, 2009. "Trade taxes and international investment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 882-899, August.
    11. Javed Younas, 2011. "Role of foreign direct investment in estimating capital mobility: a reappraisal of Feldstein-Horioka puzzle," Applied Economics Letters, Taylor & Francis Journals, vol. 18(12), pages 1133-1137.
    12. Lal, Anil K., 1995. "Increasing returns, urban unemployment, and international capital mobility: A trade policy analysis," Journal of Development Economics, Elsevier, vol. 46(1), pages 181-193, February.
    13. David Franck, 1999. "Tariff and Quota Reform with International Capital Mobility," Southern Economic Journal, John Wiley & Sons, vol. 66(1), pages 132-143, July.
    14. J. Peter Neary, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(3), pages 551-570.
    15. Trisha Bezmen, 2006. "Foreign Aid under Quantitative Restrictions: Welfare Effects and International Factor Mobility," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 709-721, September.
    16. Alan Blinder, 2010. "Teaching Macro Principles after the Financial Crisis," The Journal of Economic Education, Taylor & Francis Journals, vol. 41(4), pages 385-390, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carolin V. Schürg & Nadeem Naqvi, 2011. "Efficiency-wage Hypothesis and the Operational Production Pattern," MAGKS Papers on Economics 201146, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brian W. Bresnahan & Nadeem Naqvi & Carolin Schürg, 2012. "Efficiency-wage Hypothesis and the Operational Production Pattern," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 2(3), pages 244-244.
    2. David Franck, 1999. "Tariff and Quota Reform with International Capital Mobility," Southern Economic Journal, John Wiley & Sons, vol. 66(1), pages 132-143, July.
    3. Carolin V. Schürg & Nadeem Naqvi, 2011. "Efficiency-wage Hypothesis and the Operational Production Pattern," MAGKS Papers on Economics 201146, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Tervala, Juha, 2014. "Teaching business cycles with the IS-TR model," MPRA Paper 58992, University Library of Munich, Germany.
    5. David Franck & Nadeem Naqvi, 2000. "LDCs, International Capital Mobility and the Shadow Price of Foreign Exchange under Tariffs and Quantitative Restrictions," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(2), pages 43-54, December.
    6. Blanchard, Emily J., 2010. "Reevaluating the role of trade agreements: Does investment globalization make the WTO obsolete?," Journal of International Economics, Elsevier, vol. 82(1), pages 63-72, September.
    7. Manfred G�rtner & Bj�rn Griesbach & Florian Jung, 2014. "Is there a transatlantic divide in undergraduate macroeconomics teaching?," Applied Economics Letters, Taylor & Francis Journals, vol. 21(5), pages 297-303, March.
    8. Mamit Deme & David Franck & Nadeem Naqvi, 2005. "A General Equilibrium Skill Acquisitions Model Of Development For Lesotho," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 15-29, June.
    9. Jaime de Melo & David Tarr, 2015. "VERs under imperfect competition and foreign direct investment: A case study of the US–Japan auto VER," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 22, pages 461-483, World Scientific Publishing Co. Pte. Ltd..
    10. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    11. Martin Kniepert, 2014. "Die (Neue) Institutionenökonomik als Ansatz für einen erweiterten, offeneren Zugang zur Volkswirtschaftslehre," Working Papers 552014, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    12. repec:zbw:inwedp:552014 is not listed on IDEAS
    13. Gärtner, Manfred & Griesbach, Björn & Jung, Florian, 2011. "Teaching Macroeconomics after the Crisis: A Survey among Undergraduate Instructors in Europe and the U.S," Economics Working Paper Series 1120, University of St. Gallen, School of Economics and Political Science.
    14. Namrata Chindarkar & Dodo J. Thampapillai, 2018. "Rethinking Teaching of Basic Principles of Economics from a Sustainability Perspective," Sustainability, MDPI, vol. 10(5), pages 1-8, May.
    15. Kreickemeier, Udo, 2001. "The shadow price of foreign exchange with minimum wages," Economics Letters, Elsevier, vol. 72(3), pages 369-373, September.
    16. Anil Lal, 1997. "Import Liberalization, Urban Unemployment, and Capital Mobility: a Welfare Analysis," International Economic Journal, Taylor & Francis Journals, vol. 11(2), pages 21-37.
    17. Joseph Francis Francois & Miriam Manchin, 2013. "Lerner meets Gravity," UCL SSEES Economics and Business working paper series 123, UCL School of Slavonic and East European Studies (SSEES).
    18. Devereux, John & Roberts, Bryan, 1997. "Direct Foreign Investment and Welfare in the Transforming Economies: The Case of Central Asia," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 297-312, June.
    19. Blanchard, Emily J., 2014. "What global fragmentation means for the WTO: Article XXIV, behind-the-border concessions, and a new case for WTO limits on investment incentives," WTO Staff Working Papers ERSD-2014-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    20. Juniper, James & Nadolny, Andrew & Pantelopoulos, George & Watts, Martin, 2021. "Orthodox macroeconomic textbooks: A critical evaluation using institutional practice as a benchmark," International Review of Economics Education, Elsevier, vol. 37(C).
    21. Tadeusz Kowalski & Yochanan Shachmurove, 2011. "An Historical Walk Through Recent Financial Crises," PIER Working Paper Archive 11-019, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

    More about this item

    Keywords

    general equilibrium; production possibility frontier; production set; international capital mobility; economic policy;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:33829. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.