Big Data

The Geometry Of Global Production And Factor Price Equalisation

Date Added: Apr 2011
Format: PDF

The authors consider a production economy where commodities are partitioned into irreproducible factors and reproducible goods, and the production technologies have constant returns to scale. They examine the geometry of the efficient frontier of the global production set and derive theorems of non-substitution type. They complement the geometric viewpoint by an algebraic characterization of the efficient frontier that put emphasis on the "Factors values" of goods. They analyse the connections between the prices of goods and the prices of factors. In particular, they 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.