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The role of physical constraints on production

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  • Dzhumashev, Ratbek

Abstract

We consider the physical constraints of the production process by connecting the actual amount (volume) of physical output to its mass. To achieve this, we introduce a function that evaluates the mass of physical objects such as resources and output. Through the mass function, we demonstrate that the marginal product of resource inputs is less than the ratio of the mass density of resource inputs to that of the final products. This ratio's boundedness implies that the marginal resource product has an upper limit, meaning that the Inada condition for resources is not valid. This restriction on the marginal product of resource input has significant implications for long-term growth and environmental sustainability. It indicates that the growth of total physical output is only feasible with more resource input and a potentially higher level of pollution.

Suggested Citation

  • Dzhumashev, Ratbek, 2024. "The role of physical constraints on production," Ecological Economics, Elsevier, vol. 216(C).
    • Handle: RePEc:eee:ecolec:v:216:y:2024:i:c:s0921800923002835
    DOI: 10.1016/j.ecolecon.2023.108020
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    More about this item

    Keywords

    Inada conditions; Conservation of mass; Production function; Natural resources;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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