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Sectors May Use Multiple Technologies Simultaneously: The Rectangular Choice-of-Technology Model with Binding Factor Constraints (Revised)

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Listed:
  • Faye Duchin

    () (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)

  • Stephen H. Levine

    (Department of Environmental Engineering, Tufts University, Boston, MA, USA)

Abstract

We develop the rectangular choice-of-technology model with factor constraints, or RCOT, a linear programming input-output model for analysis of the economy of a single region. It allows for one or more sectors to operate more than one technology simultaneously, with the relatively lowest-cost one supplemented by others if it encounters a binding factor constraint. The RCOT model solves for sector outputs, goods prices that are set by the highest-cost technologies in use, and scarcity rents that correspond to binding factor constraints experienced by the lower-cost technologies. The model is motivated by the fact that mineral deposits of different qualities may be exploited simultaneously, as may primary and recycled sources for the same materials or irrigated and rainfed techniques for producing the same crop. RCOT generalizes Carter’s square choice-of-technology model, in particular adding the factor constraints that allow several alternatives to operate simultaneously. The Appendix gives a numerical example.

Suggested Citation

  • Faye Duchin & Stephen H. Levine, 2011. "Sectors May Use Multiple Technologies Simultaneously: The Rectangular Choice-of-Technology Model with Binding Factor Constraints (Revised)," Rensselaer Working Papers in Economics 1101, Rensselaer Polytechnic Institute, Department of Economics.
  • Handle: RePEc:rpi:rpiwpe:1101
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    Cited by:

    1. Malik, Arunima & Lenzen, Manfred & Ely, Rômulo Neves & Dietzenbacher, Erik, 2014. "Simulating the impact of new industries on the economy: The case of biorefining in Australia," Ecological Economics, Elsevier, vol. 107(C), pages 84-93.

    More about this item

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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