Abstract
This paper presents a simple dynamic model in which only one resource is used entirely in order to produce two goods. Technology displays constant returns in both cases. The resource is owned by a few individuals who must choose between the two activities in which to use it. Here we analyse the decisions of change of activity in which the resource is to be used taking into account the different profitability per time unit of the activities directed to produce both goods. We show that, under certain conditions, it is possible to reach cyclic, or chaotic, dynamics so that the returns per factor may never be equal in both sectors.
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© 2002 Springer-Verlag Berlin Heidelberg
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Galera, F., Coto-Millán, P. (2002). Dynamic Adjustments in a Two-Sector Model. In: Coto-Millán, P. (eds) Essays on Microeconomics and Industrial Organisation. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-662-11710-1_13
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DOI: https://doi.org/10.1007/978-3-662-11710-1_13
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-7908-1390-6
Online ISBN: 978-3-662-11710-1
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