Abstract
A non-substitution theorem asserts that under certain specified conditions an economy will have one particular price structure for each admissible value of the profit rate, regardless of the pattern of final demand. The theorem has two forms. As first stated, it applies to an economy with single production and therefore no fixed capital (Arrow 1951; Koopmans 1951; Samuelson 1951; Levhari 1965). In its later formulation, some special joint products are considered to take account of fixed capital (Samuelson 1961; Mirrlees 1969; Stiglitz 1970).
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Bibliography
Arrow, K.J. 1951. Alternative proof of the substitution theorem for Leontief models in the general case. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.
Koopmans, T.C. 1951. Alternative proof of the substitution theorem for Leontief models in the case of three industries. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.
Levhari, D. 1965. A non-substitution theorem and switching of techniques. Quarterly Journal of Economics 79: 98–105.
Mirrlees, J.A. 1969. The dynamic non-substitution theorem. Review of Economic Studies 36: 67–76.
Samuelson, P.A. 1951. Abstract of a theorem concerning substitutability in open Leontief models. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.
Samuelson, P.A. 1961. A new theorem on non-substitution. In Money growth and methodology. Lund: CWK Gleerup.
Stiglitz, J.E. 1970. Non-substitution theorems with durable capital goods. Review of Economic Studies 37: 543–552.
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Salvadori, N. (2008). Non-substitution Theorems. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1913-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1913-2
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Latest
Non-substitution Theorems- Published:
- 15 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_1913-2
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Original
Non-Substitution Theorems- Published:
- 27 November 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_1913-1