Book contents
- Frontmatter
- Contents
- PREFACE
- 1 INTRODUCTION
- PART I THE MICROECONOMIC THEORY OF PRODUCTION
- 2 THE TECHNICAL THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 3 THE ECONOMIC THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 4 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS: GENERAL THEORY
- 5 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS HOMOGENEOUS OF DEGREE ONE
- 6 ECONOMIC THEORY OF PRODUCTION WITH FIXED INPUT PRICES
- 7 THE THEORY OF COST WITH FIXED INPUT PRICES
- 8 THE ECONOMIC THEORY OF COST AND PRODUCTION WITH VARIABLE INPUT PRICES
- 9 ‘INFERIOR FACTORS’ AND THE THEORIES OF PRODUCTION AND INPUT DEMAND
- 10 THEORY OF THE MULTI-PRODUCT FIRM
- PART II MACROECONOMIC THEORIES OF DISTRIBUTION AND TECHNOLOGICAL PROGRESS
- REFERENCES
- AUTHOR INDEX
- SUBJECT INDEX
10 - THEORY OF THE MULTI-PRODUCT FIRM
Published online by Cambridge University Press: 07 October 2011
- Frontmatter
- Contents
- PREFACE
- 1 INTRODUCTION
- PART I THE MICROECONOMIC THEORY OF PRODUCTION
- 2 THE TECHNICAL THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 3 THE ECONOMIC THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 4 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS: GENERAL THEORY
- 5 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS HOMOGENEOUS OF DEGREE ONE
- 6 ECONOMIC THEORY OF PRODUCTION WITH FIXED INPUT PRICES
- 7 THE THEORY OF COST WITH FIXED INPUT PRICES
- 8 THE ECONOMIC THEORY OF COST AND PRODUCTION WITH VARIABLE INPUT PRICES
- 9 ‘INFERIOR FACTORS’ AND THE THEORIES OF PRODUCTION AND INPUT DEMAND
- 10 THEORY OF THE MULTI-PRODUCT FIRM
- PART II MACROECONOMIC THEORIES OF DISTRIBUTION AND TECHNOLOGICAL PROGRESS
- REFERENCES
- AUTHOR INDEX
- SUBJECT INDEX
Summary
Introduction
Speculation about the selling behavior (revenue side) of multi-product firms may be traced to Pigou and Mrs Robinson and, more recently, to Reder, Coase, Gordon, Clemens, Weldon, Simkin, Edwards, and Bailey. Taking some liberties, one may say that these writers viewed the pricing process in a multi-product firm as an extended application of the Pigou– Robinson theory of price discrimination (Pigou's ‘discrimination of the third degree’).
Subsequent to this original start, the multi-product firm was given a more thorough and conventional treatment by Hicks, whose approach was later extended by Allen, Samuelson, Dorfman, and Kuenne. Basically, Hicks and his followers used conventional marginal methods to analyze the profit-maximizing behavior of a firm that produces a variety of products by means of a variety of variable inputs. Fixed inputs were occasionally introduced; but their important role was not analyzed.
To be sure, it was recognized that the existence of fixed inputs is more significant in the theory of the multi-product firm than in the theory of the single-product firm, even when the latter practices price discrimination. However, it was Pfouts who first realized the crucial difference and constructed a model of the multi-product firm that permitted switching of fixed inputs among various outputs. Pfouts' model, and subsequent ones based upon it, cannot be solved by the usual methods of the calculus. The introduction of a variety of fixed inputs leads to a set of linear inequalities as constraints in the maximization process. As a result, the model must be analyzed by means of the Kuhn–Tucker theorems.
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- The Neoclassical Theory of Production and Distribution , pp. 201 - 212Publisher: Cambridge University PressPrint publication year: 1969
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