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Showing papers on "Factor price published in 1968"


Journal ArticleDOI
TL;DR: In this article, it was shown that under identical initial conditions (i.e., relative factor prices and relative costs of alternative forms of technical change) the firm will prefer more "biased" technical change relative to the situation in which it purchases factors competitively.
Abstract: In this paper an attempt is made to give precise expression to the conditions under which a profit maximizing firm with fixed research budget will choose each type of technical change (i.e., "neutral" and "nonneutral"). It was found that the optimal choice depends on the initial technology, relative factor prices, and relative costs of acquiring different types of technical change. The preferred technical change need not be exclusively of one sort (e.g., "neutral" chanige). Once "neutral" technical change becomes optimal, however, it remains so until there is a change in relative factor prices. On the other hand, adoption of a "biased" technical change may eventually cause "neutral" advance to become desired even in the absence of relative factor price changes. Examination of the firm's decision criterion under the assumption that it is a monopsonistic buyer of factors of production, discloses that under identical initial conditions (i.e., relative factor prices and relative costs of alternative forms of technical change) the firm will prefer more "biased" technical change relative to the situation in which it purchases factors competitively. In particular, the firm will, under these conditions, seek those "biased" technical changes which economize on the factor whose elasticity of supply is relatively smaller. Finally, it was also discovered that, contrary to previous suppositions, changes in the elasticity of substitution do affect the optimal capital-labor ratio for each factor price combination in all cases but one.

97 citations


Journal ArticleDOI
TL;DR: In this paper, it is shown that an increase in the input of one factor increases the marginal productivity of the others relative to the increase of the marginal output of the other factors.
Abstract: It is said that production is normal when an increase in the input of one factor increases the marginal productivity of the others. A method introduced by D. V. T. Bear (1965) can be used to demonstrate that factor inputs into competitive firms are normally gross complements. This result has been anticipated for the case of " nearly " constant-returns production.' In contrast, some results about relative factor inputs can be deduced which agree with the usual assumptions that increasing one factor price increases the demand of the others relative to the one. To recapitulate Bear's analysis, the firm maximizes

49 citations



Journal ArticleDOI
TL;DR: In this article, a regression approach is presented to the problem of extracting the influences of quality change on price and a price index for new farm tractors is calculated which allows for considerable, post-war, quality improvements in the input.
Abstract: Because of the many uses of price indices it is important that they be corrected for quality change. This paper presents a regression approach to the problem of extracting the influences of quality change on price and a price index for new farm tractors is calculated which allows for the considerable, post-war, quality improvements in the input. The results indicate that whilst the average price of tractors has risen rapidly over the post-war period, the true (constant quality) price has shown only a small increase. Some implications of these results are put forward—particularly with regard to the measurement of gross investment and capital stock, and to the importance of input quality change in explaining increasing agricultural productivity over time. Finally, firm level decision making leads to the observed changes over time in the quality demanded of an input: some consideration is given to the place of factor quality selection in firm theory.

13 citations


Journal ArticleDOI
TL;DR: In this article, the authors consider the physical input-output table of an industrial economy without foreign trade and show that if competition prevails in the long-period sense that all markets are equally easy to enter, so that a uniform rate of profit rules on all capital invested, then corresponding to the ruling rate, there is a determinate set of relative prices for all commodities and means of production, and a level of prices in terms of any numeraire.
Abstract: Consider the physical input-output table of an industrial economy without foreign trade. If competition prevails in the long-period sense that all markets are equally easy to enter, so that a uniform rate of profit rules on all capital invested, then corresponding to the ruling rate of profit there is a determinate set of relative prices for all commodities and means of production, and a level of prices in terms of any numeraire. The cost of labour in terms of own product to each employer is such that the surplus per man that he extracts is just sufficient to yield a profit at the ruling rate on the value of capital per man that he operates. Thus &dquo; labour commanded &dquo; by a unit of any commodity is higher the greater the capital to labour ratio involved in producing it. (The real wage from the point

7 citations



Journal ArticleDOI
TL;DR: The differences between Professor Chambers and myself undoubtedly result from differences in the definition and measurement of income as mentioned in this paper, and the differences between these two definitions of income can be seen as a direct consequence of the fact that they are different.
Abstract: The differences between Professor Chambers and myself undoubtedly result, as he points out in his most recent contribution to the debate,' from differences in the definition and measurement of income. The particular point at issue is the extent to which changes in the general purchasing power of money should be reflected in the income of an individual firm. In my earlier paper,2 I argued that the full distribution of income as defined and measured in Chambers' system would have the effect of maintaining residual equity in terms of general purchasing power, but that, to the extent that the specific price increase in respect of nonmonetary assets (Nr) exceeds the change in general purchasing power of the residual equity (Rp), the residual equity at the end of the period no longer commands the same quantity of operating assets N at their new prices N(1 + r). Chambers endeavored to refute this proposition by means of the following arithmetical example:

2 citations