Title: The positive theory of production externalities under perfect competition
Abstract: Aggregate cost and factor demand functions are used to develop a local envelope function which is applied in a general equilibrium model with production externalities to shed new light on the relationship between the true economy marginal costs and outputs. This relationship induces a structure to the relationship between actual prices and outputs by means of the assumption of no factor demand reversals associated with externality effects. We also provide generalisations of the Stolper–Samuelson and Rybczynski theorems highlighting the role of the externality effects.
Publication Year: 1990
Publication Date: 1990-08-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 10
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