Leontief (1963) claimed that underdeveloped countries are poor because they are by far less economically diversified. This paper shows that a general equilibrium model with a stable input-output structure and a productivity externality due to input diversification may be consistent with...

A two-sector general equilibrium model that included drugs as basic goods was relatively successful at explaining the waste of resources that the war on drugs incurs (Ortiz, 2003). Due to the assumption of constant productivity, the model predicted the rise of the drug price with supply...