Market-dependent Production Set

A country’s production possibility frontier or PPF is defined as the boundary of its economy’s production set in the net output space for a given technology and fixed quantities of primary factors of production. In general equilibrium theory, exogenous changes in technology or primary-factor supplie...

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Veröffentlicht in:MAGKS - Joint Discussion Paper Series in Economics (Band 45-2011)
Autoren: Egbert, Henrik, Naqvi, Nadeem
Format: Arbeit
Sprache:Englisch
Veröffentlicht: Philipps-Universität Marburg 2011
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Zusammenfassung:A country’s production possibility frontier or PPF is defined as the boundary of its economy’s production set in the net output space for a given technology and fixed quantities of primary factors of production. In general equilibrium theory, exogenous changes in technology or primary-factor supplies alter equilibrium prices; however, government-policy induced domestic relative commodity price changes do not alter the shape of an economy’s production set. We show that, under international capital mobility, which is empirically significant, the shape of a country’s production set does, in fact, depend on market forces and this shape can be manipulated by government policy.
Umfang:18 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0110