Normal Forms for Switch Point Patterns

Abstract

The choice of technique can be analyzed, in a circulating-capital model of prices of production, by constructing the wage frontier. Switch points arise when more than one technique is costminimizing for a specified rate of profits. This article defines four normal forms for variations in the number and sequence of switch points with a perturbation of, for example, a coefficient of production. The ’perversity’ of switch points that appear on and disappear from the wage frontier is analyzed. The conjecture is made that no other normal forms for local patterns of co-dimension one exist.