Abstract
The economic theory of production is concerned with the characterization of the input demand and output supply functions based on a theory of profit maximization subject to a production function. Two sets of issues are involved: one is the technical constraint that describes the range of production processes available to the firm, and the other is the make-up of the markets where the firm’s transactions take place. There is a substantial literature on the latter, which cannot be addressed here: we adopt the admittedly unrealistic assumption of ‘perfect competition’ in both commodity and factor markets. Our purpose is to discuss the properties of the production technology in the context of the neoclassical theory of the multiple-product and multiple-input firm, identify the specific forms of the production function which are proposed in the literature, and discuss the duality principles as well as some of the new dynamic factor demand model analyses.
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Nadiri, M.I. (2018). Production: Neoclassical Theories. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1729
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1729
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