William Schworm

IMPLICIT SEPARABILITY: CHARACTERISATION AND IMPLICATIONS FOR CONSUMER DEMANDS

Abstract We characterize a general form of separability which we call implicit separability . It is more general than all known types of separability and contains them as special cases. We provide complete characterisations in terms of the direct preference ordering, its dual expenditure function, the demand functions, and the Slutsky

THE EXISTENCE OF INPUT AND OUTPUT AGGREGATES IN AGGREGATE PRODUCTION FUNCTIONS

In this paper, we make two contributions to the literature on aggregating inputs and outputs in economy production functions. First, we present necessary and sufficient conditions for aggregating efficiently allocated goods under general assumptions on the technology. Second, we present a general theorem on the conditions for the existence of aggregates of both efficiently allocated goods and arbitrarily allocated goods. We use this theorem to elucidate the role of efficiency in determining the existence of aggregates.

Aggregate Investment and Consistent Intertemporal Technologies

It is frequent practice to model an industry or economy as if it were a single agent solving a single optimization problem. A model of firm behavior which has had extensive use as an aggregative model is the adjustment cost model of investment. We assume there are a number of competitive firms in an industry that choose investment paths to maximize their present value; the technologies of the firms exhibit capital stock adjustment costs. For general concave technologies of the firms, there is no aggregate concave technology that can represent the technological possibilities available to the industry. We find conditions on the technologies of the firms that are necessary and sufficient for the existence of an aggregate technology that can consistently model the industrys behavior and discuss their empirical implications.

The Structure of Economies with Aggregate Measures of Capital: A Complete Characterization

In this paper, we present the primal characterizations of the technologies that are consistent with capital aggregation. These characterizations are dual to the profit function restrictions obtained by Gorman and complete the closed-form production function restrictions obtained by Fisher. We use the result to solve a problem recently posed by Fisher. In addition, we pose and solve a natural extension of the usual capital aggregation problem.

Monopsonistic Control of a Common Property Renewable Resource

In this paper the Crutchfield and Pontecorvo conjecture that a monopsonistic processing sector would induce efficient use of a common property resource is analysed. It is shown that if the harvesting sector consists of a large number of firms with identical convex technologies, then the conjecture is correct. In addition, sufficient conditions are found under which the stationary resource stock with a monopsonistic processing sector is greater than the efficient size.[Авторский текст]

Necessary and sufficient conditions for factor price equalization

Although models with factor price equalization are used frequently in both theoretical and applied research in international economics, only sufficient conditions for factor price equalization have been presented in the literature. In this paper, we present necessary and sufficient conditions for FPE under quite general assumptions about the technologies of different countries. The necessary and sufficient conditions we derive are consistent with joint production, decreasing returns to scale, and substantive differences in the technologies and endowments of different countries. Our results enable us to reconcile the classical approach and the integrated equilibrium approach to factor price equalization.

Tax policy, capital use, and investment incentives

Abstract In this paper, we investigate the effect of a corporate income tax on the utilization and maintenance of capital and on the demand for capital stock and services. We find that a tax that allows interest deductions is distortionary unless allowable depreciation depends on the firms utilization and maintenance decisions. Also, we show that the usual demand equation for capital stock is misspecified if capital utilization is not a technological constant.

Rationalizing the Use of Aggregates in Natural Resource Economics

In natural resource economics as in many other areas it is a frequent practice to treat entire industries or even economies as if they were a single firm extracting from a single resource. It is further assumed that there is an aggregate technology set and that the optimization of the present value of net receipts of a firm subject to the technology set characterizes the optimal movement over time of the aggregate extraction rate and the resource stock.

The validity of piecemeal second-best policy☆

Abstract If there are irreducible distortions in one sector of an economy, when is it optimal to set consumer prices proportional to producer prices in the other sector? For the case of a single consumer, Jewitt demonstrated that implicit separability of the consumers preferences is necessary and sufficient for the optimality of piecemeal second-best policy. We show that in a multi-consumer economy piecemeal policy is optimal if and only if the aggregate compensated demand system has a two-sector representation. Only three broad classes of economies can have two-sector representations. This considerably restricts the circumstances in which piecemeal second-best policies are optimal.

The Implications of Additive Community Preferences in a Multi-Consumer Economy

We investigate the consequences of imposing additivity on community preferences. We show that there are important implications of additive community preferences that are not implied by the additivity of a single consumers preferences. In particular, we show that imposing additivity on community preferences implies the existence of a representative consumer with a utility function in the CES family. We demonstrate the restrictive nature of these implications with three examples. Our interpretation of the results is that single consumer models are unable to adequately represent important features of multi-consumer economies.