Rents, resources, and multiple technologies; Ricardian mechanisms in input-output modelling

Albert E. Steenge*, Maaike C. Bouwmeester, André Carrascal Incera

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
122 Downloads (Pure)

Abstract

To allow for ‘multiple technologies’ to produce a homogeneous output in input–output models, Duchin and Levine [(2011) Sectors may use Multiple Technologies Simultaneously: The Rectangular Choice-of-technology Model with Binding Factor Constraints, Economic Systems Research, 23(3), 281–302] propose an optimization model constrained by primary resources. We show that the Duchin–Levine model contains two different mechanisms by which multiple technologies can arise. If a factor in short supply is shared by the original and the newly entering technology, the output of the original, lower-cost technology will be reduced to make room for the higher-cost technology which is less intensive in that factor. In contrast, if the factor in short supply is technology-specific, a higher-cost technology supplements the original lowest-cost one, which stays fully active. Either mechanism implies a mechanism-specific set of prices, quantities and rents. We relate these results to classical views on comparative advantage, fixed output levels and the origin of rents.

Original languageEnglish
JournalEconomic Systems Research
Early online date31 Dec 2018
DOIs
Publication statusE-pub ahead of print - 31 Dec 2018

Keywords

  • Multiple technologies
  • resource constraints
  • scarcity rents
  • shared factors
  • technology-specific factors

ASJC Scopus subject areas

  • Economics and Econometrics

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