scholarly journals On the existence and computation of an equilibrium in an economy with constant returns to scale production

1993 ◽  
Vol 44 (2) ◽  
pp. 143-160 ◽  
Author(s):  
Gerard van der Laan ◽  
Hans Kremers

2015 ◽  
Vol 19 (8) ◽  
pp. 1780-1799 ◽  
Author(s):  
Jean-François Mertens ◽  
Anna Rubinchik

The main result is that the golden rule equilibrium (GRE) is Pareto optimal (in the classical sense) in an overlapping generations (OG) model with constant-returns-to-scale production, transfers, arbitrary life-time productivity and homogeneous instantaneous felicity. In addition, we extend Cass and Yaari's equivalence between efficiency (aggregate consumption dominance) and present value dominance (with evaluation made using a candidate equilibrium price path).



Author(s):  
Yves Balasko

This chapter examines the net supply correspondence of a constant returns to scale firms under suitable convexity and smoothness assumptions. These assumptions are comparable to those used in the previous chapters for consumers and production with decreasing returns to scale. The chapter starts by formulating constant returns to scale production by way of production sets with arbitrary numbers of inputs and outputs. It then addresses the profit maximization problem of a constant returns to scale firm. That problem does not always have a solution. More accurately, if some feasible activity yields a strictly positive profit at some given prices, then it suffices to consider an arbitrarily large multiple of that activity vector to get a feasible activity that yields an arbitrarily large profit at the same prices. The firm can then make an arbitrarily large profit.



2021 ◽  
Author(s):  
Victor V. Podinovski

Efficiency Analysis for Multicomponent Production Processes Conventional models concerned with efficiency analysis of organizations typically consider a single production process, or technology, in which all inputs are used in the production of all outputs. This approach does not account well for the situations in which the organizations are involved in several component production processes whose inputs and outputs may be shared by different processes. The main difficulty in modeling such technologies is the fact that we often do not know the exact allocation of the shared inputs and outputs to individual processes. In “Variable and Constant Returns-to-Scale Production Technologies with Component Processes,” V. V. Podinovski shows how this problem can be overcome by the consideration of the worst-case scenario for the allocation of the shared inputs and outputs to different components of the technology. This approach leads to the development of multicomponent variants of two well-established nonparametric models. An application involving universities in England demonstrates the usefulness and improved discriminating power of the new models compared with their conventional analogues.





2014 ◽  
Vol 14 (1) ◽  
pp. 127-148 ◽  
Author(s):  
Christian Jensen

AbstractReplication alone does not yield a smooth constant-returns-to-scale production function as those usually assumed in the literature. However, such a function arises endogenously with replication, driven by profit-maximization, if the efficiency of the underlying production process varies with the intensity it is operated at, and reaches a maximum at a stationary point. The result applies when the number of production processes must be discrete, thus overcoming the so-called integer problem. When inputs are non-rival, public goods or generated by externalities, replication can lead to increasing or decreasing returns to scale.





Author(s):  
Carlos Alós-Ferrer ◽  
Johannes Buckenmaier ◽  
Georg Kirchsteiger

AbstractWhen alternative market institutions are available, traders have to decide both where and how much to trade. We conducted an experiment where traders decided first whether to trade in an (efficient) double-auction institution or in a posted-offers one (favoring sellers), and second how much to trade. When sellers face decreasing returns to scale (increasing production costs), fast coordination on the double-auction occurs, with the posted-offers institution becoming inactive. In contrast, under constant returns to scale, both institutions remain active and coordination is slower. The reason is that sellers trade off higher efficiency in a market with dwindling profits for biased-up profits in a market with vanishing customers. Hence, efficiency alone might not be sufficient to guarantee coordination on a single market institution if the surplus distribution is asymmetric. Trading behavior approaches equilibrium predictions (market clearing) within each institution, but switching behavior across institutions is explained by simple rules of thumb, with buyers chasing low prices and sellers considering both prices and trader ratios.



Author(s):  
Victor V. Podinovski ◽  
Tatiana Bouzdine-Chameeva

AbstractConventional models of data envelopment analysis (DEA) are based on the constant and variable returns-to-scale production technologies. Any optimal input and output weights of the multiplier DEA models based on these technologies are interpreted as being the most favorable for the decision making unit (DMU) under the assessment when the latter is benchmarked against the set of all observed DMUs. In this paper we consider a very large class of DEA models based on arbitrary polyhedral technologies, which includes almost all known convex DEA models. We highlight the fact that the conventional interpretation of the optimal input and output weights in such models is generally incorrect, which raises a question about the meaning of multiplier models. We address this question and prove that the optimal solutions of such models show the DMU under the assessment in the best light in comparison to the entire technology, but not necessarily in comparison to the set of observed DMUs. This result allows a clear and meaningful interpretation of the optimal solutions of multiplier models, including known models with a complex constraint structure whose interpretation has been problematic and left unaddressed in the existing literature.



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