Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95276
Authors: 
Bertoletti, Paolo
Rampa, Giorgio
Year of Publication: 
2011
Series/Report no.: 
Quaderni di Dipartimento 145
Abstract: 
A necessary and sufficient condition for an input to be inferior is that, taking into account the input adjustment, an increase of its price raises the marginal productivity of all inputs. Contrary to a widespread opinion, it is not necessary that (some) inputs are “rivals” (i.e., that some marginal productivity cross derivative is negative). We discuss these facts and illustrate them by introducing a few simple functional forms for the production function. Our results suggest that the existence of inferior inputs is naturally associate to the presence of increasing returns, and possibly make the case for inferiority considerably stronger.
Subjects: 
inferior and normal inputs
marginal productivity
homotheticity
JEL: 
D11
D21
D24
Document Type: 
Working Paper

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