Premium
Organization of production in a competitive economy
Author(s) -
Castaneda Marco A.
Publication year - 2006
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2006.00029.x
Subject(s) - production (economics) , economics , general equilibrium theory , function (biology) , competitive equilibrium , transaction cost , microeconomics , database transaction , production theory , set (abstract data type) , economy , industrial organization , computer science , evolutionary biology , biology , programming language
In the present paper we introduce a general equilibrium model of the organization of production and analyze the optimality and existence of an equilibrium. We introduce the production technology of the economy as a collection of production processes and allow each potential producer to choose the production processes to operate. We model organization and transaction costs by means of an organizational technology that determines the production set of a producer as a function of the production processes that the producer chooses to operate. For a competitive economy, we show the equilibrium organization of production is optimal and then prove a general existence theorem for an atomless economy.