Reswitching: Extending a Famous Example
21 Pages Posted: 20 Mar 2018
Date Written: March 15, 2018
In certain models of commodities produced by means of commodities, the choice of technique is analyzed by the construction of the wage frontier. This article presents a numeric example of a continuum of wage curves tangent at a switch point. Technological progress leads to the recurrence of techniques. No switch points then exist, but the cost-minimizing technique varies continuously along the wage frontier. Further progress leads to the disappearance of the recurrence of techniques and, eventually, a single technique becoming cost-minimizing for all feasible rates of profits.
Keywords: Choice of technique, structural dynamics, switch points, technological change
JEL Classification: B51, C67, D24, D46, O33
Suggested Citation: Suggested Citation