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- Title
INTERMEDIATE GOODS, THE PRODUCTION POSSIBILITY CURVE, AND GAINS FROM TRADE.
- Authors
Melvin, James R.
- Abstract
The article considers some difficulties that may be encountered in defining the production possibility curve in an intermediate good model. Production possibility curves of the kind used by Ronald I. McKinnon were first derived by Nicholas Georgescu-Roegen, and in the simple two-product, single-fixed-factor case can be constructed by drawing the common tangent to the two total product curves. Each good is assumed to use labor and the output of the other industry as inputs. We now want to extend our analysis to include the possibility of international trade. Again we assume that there are only two countries and that in autarky both produce positive amounts of the same two goods. Since we want to retain the assumption of a single fixed factor we must assume that production functions differ between countries, for if they do not the two production possibility curves would have the same slope, and trade could never be profitable to either country.
- Subjects
PRODUCTION (Economic theory); SUPPLY &; demand; INTERMEDIATE goods; COMMERCIAL products; MCKINNON, Ronald I.; GEORGESCU-Roegen, Nicholas, 1906-1994; CAPITAL productivity
- Publication
Quarterly Journal of Economics, 1969, Vol 83, Issue 1, p141
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883998