Economic essays

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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

106 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK of X to expand while the fall in the price of Y would, since its supply curve is negative, cause the quantity of Y to expand also. But since Y’s negative elasticity is unity while X's positive elasticity is now .9, this would mean that the quantity of Y would tend to increase more rapidly than that of X, and hence its marginal productivity would continue to fall and that of X would continue to rise, so that the supply of Y would be con- tinuously increasing faster than X, and there would tend to be a cumulative increase in the remuneration of X and a correspond- ing fall in that of Y. Under these elasticities it might be thought that there would not be stable equilibrium. But the outcome depends on the type of productivity equation which is assumed, for its partial derivatives furnish the demand curves for the factors whose intersections with the supply curves determine the point of equilibrium. If, however, the negative elasticity of the one were equal to the ultimate positive elasticity of the other, after the initial alteration in productivities developed, there would be no further alteration of the equilib- rium since the increase in quantity would be the same for both. If the final positive elas- ticity were to be higher than the negative elas- ticity, then there would be a counteracting force tending to bring the rel- ative returns nearer even to the original level than that which would result from equal elasticities. Where both supply curves are negatively in- clined (Figure 21) there are further possibilities of unstable equi- librium. Thus, if the supply curve of one factor X is to shift to the left, so that less will be offered at the same price as before, then the increase in payment to X will cause its supply to con- tract while that of Y will expand. This will in turn mean a still oreater increase in the marginal productivity of X and a further

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