DIFFERENTIAL DEPRECIATION AND THE 2 <b>×</b> 2 MODEL OF DISTRIBUTION, PRICING AND PRODUCTION

In a two-sector model it is entirely arbitrary to take the depreciation rate to be the same in both sectors; capital is being used differently in the two sectors! With differential depreciation rates factor-intensity-reversal can arise even when both sectors have a Cobb-Douglas technology. Efficient allocations do not involve mutual tangency points between consumption-good and capital-good isoquants. Copyright Blackwell Publishing Ltd 2006.

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Year of publication:	2006
Authors:	Steedman, Ian
Published in:	Metroeconomica. - Wiley Blackwell, ISSN 0026-1386. - Vol. 57.2006, 1, p. 112-119
Publisher:	Wiley Blackwell

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005203252