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General Equilibrium Theory of Value$
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Yves Balasko

Print publication date: 2011

Print ISBN-13: 9780691146799

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691146799.001.0001

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Equilibrium with Decreasing Returns

Equilibrium with Decreasing Returns

(p.96) Chapter 10 Equilibrium with Decreasing Returns
General Equilibrium Theory of Value

Yves Balasko

Princeton University Press

This chapter discusses an approach to the study of the general equilibrium model with private ownership of smooth production with decreasing returns by adjusting consumers’ individual demand functions for production. The “exchange model” defined by these production adjusted demand functions is then shown to be equivalent to the original general equilibrium model with private ownership of production. The production adjusted demand functions are very close to satisfy the properties considered in the first part of this book, properties that guarantee that the main properties of the exchange model are satisfied. As a result, the general equilibrium model with private ownership of smooth production with decreasing returns features exactly the same properties as the standard smooth exchange model.

Keywords:   general equilibrium model, private ownership, smooth production, demand functions, exchange model, decreasing returns

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