Leontief functions of two variables. A new perspective
DOI:
https://doi.org/10.24275/uam/azc/dcsh/ae/2021v36n93/MongeKeywords:
Leontief functions, efficiency, eontief fMarginal Rate of Substitution.Abstract
This work is theoretical in nature. It seeks to provide an alternative analysis on the Leontief functions in two variables; alternative in the sense that it incorporates the differential calculus ─scarcely used in what regards to this phenomenon─ to find a generalized form of the Marginal Rate of Substitution in perfect complements; it dispenses with it to demonstrate that in an economy of two sectors, each with any form of Leontief technologies, competitive equilibrium also coincides with the technologically efficient allocation. Finally, it is proven that every endowment economy with two individuals both with Leontief preferences ─regardless of their specific form─ has infinite Pareto equilibria.
JEL Classification: C02; C62; D01; D11; D20; D50.
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References
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