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A NEOCLASSICAL FOUNDATION OF THE NON‐LINEAR INPUT‐OUTPUT MODEL
Author(s) -
Iritani Jun,
Nagatani Hiroaki
Publication year - 1991
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1991.tb00370.x
Subject(s) - economics , commodity , final demand , mathematical economics , profit (economics) , production (economics) , matrix (chemical analysis) , function (biology) , microeconomics , market economy , materials science , evolutionary biology , composite material , biology
A non‐linear input‐output system is constructed on the basis of neoclassical production technologies. Four results are reported: (i) there exists a unique solution to the developed input‐output system; (ii) every real square matrix can be the Jacobi matrix of the function relating gross outputs to net outputs; (iii) if the system has a solution at a final demand vector, there is a solution at every final demand vector near it; and (iv) when the final demand for a commodity increases, its price never decreases. The system is founded on a profit function of the economy, which represents a neoclassical production possibility. By this treatment, the system can deal with joint productions, as well as no‐joint productions.