Economic essays

Bibliographic data

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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 109 received by the factor which has improved its bargaining posi- tion, then the less will be its ultimate gains. For a gain of a given percentage in the unit return to this factor will cause a loss of more than this percentage in the unit return of the other, This in turn will cause the supply of the factor which has experi- enced the loss to contract more rapidly than it would had the relationship between the shares been one of equality. This greater contraction in the supply would, of course, tend towards estab- lishing the ultimate equilibrium nearer the original situation. But it would not restore the original equilibrium since the initial shift in bargaining powers and in the quantity of the one factor must be remembered. Conversely, the smaller the share of the total product received by a factor, the more per unit it can secure (other things being equal) from an increase in bargaining power. This is so because the smaller its share, the less is the decrease in the price per unit of the other factor, and the less consequently is the diminution in the quantity of this second factor. When the supply curve of one factor is negatively and that of the other factor positively inclined, then if the former has the smaller share of the total product and if the positive factor, or that with the larger share, improves its bargaining position, the latter will gain more than if the shares were originally equal. For a five percent unit increase to the positive factor would mean a ten percent decrease to the negative factor. If both their elas- ticities were originally equal to unity, then the supply of the negative factor would increase by ten instead of by five percent, while that of the positive factor would grow by only five percent. The resultant increased marginal productivity of the positive factor and the decrease for the negative factor would alter the situation still more in favor of the former. If, however, the original elasticity of the negatively inclined factor had been but .5, then after the initial change in bargain- ing power, there would be no further changes since the quantities of each would now expand in the same ratio. But this, it should be noted, would give a result more advantageous to the positive factor than that which would have obtained had the shares been equal. For then the supply of the positive factor would have increased more rapidly than that of the negative factor, so that the final equilibrium would give a unit return to the former

Access restriction

Copyright

fullscreen: Economic essays

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation