TY - JOUR

T1 - On 'Non-substitution' in Production Models

AU - Pasinetti, Luigi Lodovico

PY - 1977

Y1 - 1977

N2 - The Author of this article analyses professor Samuelson’s ‘Non-substitution Theorem’ and concludes that in fact it is composed of two different theorems: the PAS (Paul A. Samuelson) theorem, asserting that prices remain unchanged as demand changes; and the Supplementary Substitution Theorem (implicitly taken for granted), asserting that a variation in prices induces substitution.
The Author concludes that the PAS Theorem is correct but the Supplementary Theorem is false. He continues to prove that to refer to the PAS Theorem as the ‘Non-substitution Theorem” is misleading and induces logical error. The misleading feature of the statement consists in conveying information in a negative way (by negation) and thereby implying logically that, if the conditions postulated by the theorem were not satisfied, then that something (i.e. substitution) would happen. This statement according to the Author is false. The Author concludes that in a production context with a given technology, with or without joint products, the traditional concept of substitution makes no sense.

AB - The Author of this article analyses professor Samuelson’s ‘Non-substitution Theorem’ and concludes that in fact it is composed of two different theorems: the PAS (Paul A. Samuelson) theorem, asserting that prices remain unchanged as demand changes; and the Supplementary Substitution Theorem (implicitly taken for granted), asserting that a variation in prices induces substitution.
The Author concludes that the PAS Theorem is correct but the Supplementary Theorem is false. He continues to prove that to refer to the PAS Theorem as the ‘Non-substitution Theorem” is misleading and induces logical error. The misleading feature of the statement consists in conveying information in a negative way (by negation) and thereby implying logically that, if the conditions postulated by the theorem were not satisfied, then that something (i.e. substitution) would happen. This statement according to the Author is false. The Author concludes that in a production context with a given technology, with or without joint products, the traditional concept of substitution makes no sense.

KW - Meaning of substitution

KW - PAS Theorem vs Samuelson Non-substitution Theorem

KW - Substitution in the real world

KW - The stages of non-substitution

KW - Meaning of substitution

KW - PAS Theorem vs Samuelson Non-substitution Theorem

KW - Substitution in the real world

KW - The stages of non-substitution

UR - http://hdl.handle.net/10807/67286

U2 - 10.1093/oxfordjournals.cje.a035372

DO - 10.1093/oxfordjournals.cje.a035372

M3 - Article

SN - 0309-166X

VL - 1

SP - 389

EP - 394

JO - Cambridge Journal of Economics

JF - Cambridge Journal of Economics

ER -