Publication

Rents, resources, and multiple technologies: Ricardian mechanisms in input-output modelling

Steenge, A. E., Bouwmeester, M. C. & Carrascal Incera, A., 3-Jul-2019, In : Economic Systems Research. 31, 3, p. 445-466 12 p.

Research output: Contribution to journalArticleAcademicpeer-review

To allow for ‘multiple technologies’ to produce a homogeneous output in input–output models, Duchin and Levine [(2011) Sectors may use Multiple Technologies Simultaneously: The Rectangular Choice-of-technology Model with Binding Factor Constraints, Economic Systems Research, 23(3), 281–302] propose an optimization model constrained by primary resources. We show that the Duchin–Levine model contains two different mechanisms by which multiple technologies can arise. If a factor in short supply is shared by the original and the newly entering technology, the output of the original, lower-cost technology will be reduced to make room for the higher-cost technology which is less intensive in that factor. In contrast, if the factor in short supply is technology-specific, a higher-cost technology supplements the original lowest-cost one, which stays fully active. Either mechanism implies a mechanism-specific set of prices, quantities and rents. We relate these results to classical views on comparative advantage, fixed output levels and the origin of rents.

Original languageEnglish
Pages (from-to)445-466
Number of pages12
JournalEconomic Systems Research
Volume31
Issue number3
Publication statusPublished - 3-Jul-2019

    Keywords

  • Multiple technologies, resource constraints, scarcity rents, shared factors, technology-specific factors, WATER, LAND

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