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EXTERNALITIES IN PRODUCTION AND CHAOS
Author(s) -
Rauscher Michael
Publication year - 1992
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.1992.tb00718.x
Subject(s) - externality , economics , production (economics) , microeconomics , capital (architecture) , factors of production , chaotic , management , archaeology , history
ABSTRACT The paper investigates the stability of a competitive equilibrium if there are externalities in production. There is a positive externality associated with capital, e.g. a spill‐over of technological knowledge, and a negative externality associated with an environmental factor of production. Firms are assumed not to take these externalities into account when they adjust their factor allocation to changes in factor prices It is shown that all types of adjustment paths. including chaotic ones, are feasible.