Advertisement

A One Sector Model

  • C. C. von Weizsäcker
Part of the Lecture Notes in Operations Research and Mathematical Systems book series (LNE, volume 54)

Abstract

We now want to introduce the time dimension into the production process explicitely. Inputs have to be made available before the outputs are available. We first consider a very simple model with only one producible commodity and one nonproducible good (called labour). To produce one unit of the commodity we need a units of this commodity as input (0 < a < 1) and ao units of labour input. Both inputs have to be available one period before the availability of the output. But we assume that the wage is paid to workers only after the output has become available. Hence there is no interest cost on wage payments. If the price of the commodity is p, if the nominal wage rate is \(\bar w\) and if the interest rate is r we have the unit cost equation
$$p = {a_o}\bar w + \left( {1 + r} \right)ap$$
or
$$p = \frac{{{a_o}\bar w}}{{1 - \left( {1 + r} \right)a}}$$

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. R. M. Solow, A Contribution to the Theory of Economic Growth, Quart.J. of Ec., Vol. 70, 1956, pp. 65–94CrossRefGoogle Scholar
  2. P. A. Samuelson, Parable and Realism in Capital Theory: The Surrogate Production Function, Rev.Ec.Stud., Vol. 29, 1962,pp. 193–206CrossRefGoogle Scholar
  3. J. Robinson, The Production Function and the Theory of Capital, Rev.Ec.Stud., Vol.21, 1953/54, pp.81ffGoogle Scholar
  4. R. M. Solow, The Production Function and the Theory of Capital, RES, Vol.23, 1955/56, pp. 101ffGoogle Scholar
  5. J. Robinson, The Production Function and the Theory of Capital. A Reply, RES, Vol.23, 1955/56, pp.247ffGoogle Scholar
  6. R. M. Solow, Growth Theory, An Exposition, Oxford 1970Google Scholar
  7. Burmeister-Dobell, Chapter 2Google Scholar

Copyright information

© Springer-Verlag Berlin · Heidelberg 1971

Authors and Affiliations

  • C. C. von Weizsäcker
    • 1
  1. 1.Albert Weber-Institut für Sozial- und StaatswissenschaftenUniversität HeidelbergDeutschland

Personalised recommendations