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RELATIVE PRICE LINEARITY AND JRC EQUILIBRIUM
Author(s) -
WICKHAM ELIZABETH D.
Publication year - 1981
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1981.tb00346.x
Subject(s) - economics , relative price , econometrics , general equilibrium theory , production (economics) , frontier , nonlinear system , microeconomics , physics , archaeology , quantum mechanics , history
A theoretical explanation is given which resolves the relative price nonlinearity problem in household production models where the attributes are market produced. It is shown that in a Lancasterian framework with markets of a modified Chamberlin type kinked demand curves can be derived which, together with large scale economies, lead to a market equilibrium where all goods are just relevant commodities (JRC) and the characteristics frontier is linear (LCF). A simultaneous testing procedure is proposed to estimate the objective structure among inputs.