Used Capital: Implications for Isoquants, Production Functions, and Shepard's Lemma
The quantity of capital services provided by a used capital good is usually defined so as to be proportional to the good's rent. Except in special circumstances, with this definition, isoquants will have a linear segment coinciding with part of the minimum cost isocost line; the production function will not be strictly quasi-concave; the cost function will not be differentiable; Shephard's lemma will not be applicable; and factor inputs will not be functions of factor prices. Similar problems occur for land a nd labor if their quality can vary.
Year of publication: |
1988
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Authors: | Miller, Edward M. |
Published in: |
Eastern Economic Journal. - Eastern Economic Association - EEA, ISSN 0094-5056. - Vol. 14.1988, 2, p. 141-152
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Publisher: |
Eastern Economic Association - EEA |
Saved in:
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