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- Title
AN ADJUSTMENT PROCESS FOR AN ECONOMY WITH LINEAR PRODUCTION TECHNOLOGIES.
- Authors
Van Den Elzen, Antoon; Van Der Laan, Gerard; Talman, Dolf
- Abstract
In this paper an adjustment process for a general equilibrium model with linear production technologies is given. The process reaches an equilibrium in the economy by simultaneous adaptations of prices and activity levels. Initially the prices of the commodities in excess demand are relatively increased and the prices of the commodities in excess supply are relatively decreased. Firms have only a positive activity level when they make zero profit. An important feature of the process is that it keeps track of the location of the starting price vector throughout its operation. Furthermore, the choice of the starting price vector is only limited by economic considerations. Besides, the process converges under rather weak conditions and possesses an appealing economic interpretation.
- Subjects
ECONOMIC equilibrium; PRODUCTION (Economic theory); MATHEMATICAL models; ECONOMICS; ECONOMIC models; PROFIT; COMMERCIAL products
- Publication
Mathematics of Operations Research, 1994, Vol 19, Issue 2, p341
- ISSN
0364-765X
- Publication type
Article
- DOI
10.1287/moor.19.2.341