Factor Supplies, Welfare and Output When Non-traded Intermediate Production Has Increasing Returns

Sajid Anwar

    Research output: Contribution to journalComment/debate

    Abstract

    This paper considers the impact of an exogenous change in the supply of primary factors on output levels, relative prices and welfare in the presence of output generated increasing returns to scale. Unlike the existing studies, this paper utilises a model of a small open economy where increasing returns do not occur in the production of a traded final good but in the production of a non-traded intermediate good. Within the context of the present study, it is shown that the Rybczynski theorem is unlikely to hold and an increase in the supply of either primary factor can harm welfare.
    Original languageEnglish
    Pages (from-to)176-188
    Number of pages9
    JournalAustralian Economic Papers
    Volume38
    Issue number2
    DOIs
    Publication statusPublished - 1999

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