Economies with Production

In this chapter, we extend the model introduced in the previous chapter so as to take account of production: Commodities are not just available, but are produced using other commodities. This gives rise to a specific economic activity, production, which in our model is carried out by specific agents, producers, who select the bundles of commodities used as inputs and outputs. Producers are treated as derived agents, i.e. they are not themselves individuals endowed with preferences on bundles or allocations, rather they represent the preferences of some or all consumers in a particular way to be specified in the model…