Conflict generating product price changes: The imputed output approach

Abstract

A novel approach to the generalisation of the conflict generating effects of product price changes on household incomes and utilities is developed. It is based upon the concepts of household production of goods and complementarities in production between households. Economy outputs are imputed to households. The imputed household outputs may be positive or negative. Households have an incentive to supply factors to firms if and only if at least one imputed output is negative. It is shown that households which are complementary in production are competitive in distribution. The results are generalised to economies with increasing returns to scale industries.