Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

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Title:: Elasticity of supply as a determinant of distribution / Paul H. Douglas

Collection:: Economics Books

94 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK of Y, so that its marginal productivity would rise still further and that of Y would decline yet more. This in turn would stimulate X to decrease at twice the rate of Y and would lead to another increase in X’s marginal productivity. There would thus be a cumulative process. Here as in all these cases the point of equilibrium would depend on the type of productivity equation assumed. Its partial derivatives furnish the demand curves for the factors which must be thought of as equations to be solved simultaneously with the supply curves under discussion. When, however, the negative elasticities are less than the bositive elasticities, as in Figure 13 with X as —.5 and Y as +1.0, then though the initial increase to both would cause the supply of X to contract and that of Y to expand, there would not be the same after effect. In the first place, there would not be the same relative differences in the supplies of the factors created as would have been the case had X's elasticity been —1.0 rather than —.5. Secondly, the supply of Y would now decrease from the amount B at twice the rate at which that of X would increase from C. Hence, there would be something of a readjustment of marginal produc- tivities, with Y rising from the lowly station to which the move- ment in opposite directions had consigned it while that of X would be lowered from its high estate. The final equilibrium (i.e., P5 for Y and P4 for X) then would be one which would be distinctly more favorable to Y than when the elasticities were plus and minus 1.0 respectively. Finally, what is the situation when both supply curves are negative? If they are equal, then an advance in the return paid to each unit, will cause equal proportionate reductions in the quantity offered and hence will not throw the relative marginal productivities of the two factors out of line with each - r <

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