The geometry of global production and factor price equalisation

Pre-print, Working paper: We consider a production economy where commodities are partitioned into irreproducible factors and reproducible goods, and the production technologies have constant returns to scale. We examine the geometry of the efficient frontier of the global production set and derive theorems of nonsubstitution type. We complement the geometric viewpoint by an algebraic characterization of the efficient frontier, that put emphasis on the "factors values" of goods. We analyse the connections between the prices of goods and the prices of factors. In particular, we 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.

Author(s)

Ivar Ekeland, Roger Guesnerie

Date of publication
  • 2006
Keywords JEL
D24 D51 D57 D58 E11 F11
Keywords
  • Constant returns to scale
  • Global production set
  • Non-substitution
  • Factor values
  • Factor price equalisation
Internal reference
  • PSE Working Papers n°2006-50
Version
  • 1