Process Recurrence and Input Use at the Industry Level: A Coherent Long-Period Analysis

The familiar partial equilibrium analysis of an individual industry's use of a particular input involves changing only one price (that of the particular input in question), even when long period equilibrium is considered. But this is incoherent, other than in fluke cases, since such a price change will always force other industries out of long period equilibrium. When this incoherence is removed, and equilibrium is taken seriously, the comparative statics results obtained can differ sharply from those derived from the familiar analysis.