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

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 111 would otherwise be the case, and consequently would cause the supply of this other factor to be produced more abundantly. This in turn would raise the marginal productivity of the larger’ factor more than under the condition of equal sharing in the product. Where, however, the smaller factor successfully takes the aggressive, the unit loss to the larger factor is of a smaller relative magnitude than its own gain, and consequently the quantity of the other and larger factor will expand less than would be the case where equal sharing prevailed, and a one per- cent increase to one factor was accompanied by a one percent loss to the other. Hence the ultimate marginal productivity of the smaller factor will be less than it otherwise would be and it would profit less from an increase in the effectiveness of its bargaining power. The matter may indeed be summed up by saying that it is to the advantage of the factor which improves its bargaining power to expand as little as possible in quantity, and indeed to decrease as rapidly as possible, while the less the other factor decreases and indeed the more it increases, the greater will be the perma- nent gain secured by the factor which has advanced its bargain- ing power. But such movements in the relative quantities of the factors are not only caused by (a) the relative elasticities of the supply of the factors as analyzed in the sections five, six and seven, but also (b) the relative proportions of the total product obtained originally by the two factors. (1) When both factors have positively inclined supply curves, the smaller the share enjoyed by the factor which improves its position, the more it can gain, and the larger its share the less it can gain. (2) When both factors have negative supply curves, the larger the share of the factor which improves its position the more it can gain, and the smaller its share, the smaller will be its ultimate increased return per unit. (3) When one factor is negative and the other is positive, both will gain more if, when they improve their bargaining strength, the positive factor has the larger share while both would lose more than they would otherwise do if the negative factor were to have the larger share. With regard to the quantity of a factor supplied the combined * By the large factor is meant the factor enjoying the greater share of the product,

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