Structured Production Systems: Viability

Robert P. Gilles and Marialaura Pesce

Papers from arXiv.org

Abstract: This paper introduces a novel framework for analysing equilibrium in structured production systems incorporating a static social division of labour by distinguishing between consumption goods traded in competitive markets and intermediate goods exchanged through bilateral relationships. We develop the concept of viability -- the requirement that all producers earn positive incomes -- as a foundational equilibrium prerequisite. Our main theoretical contribution establishes that acyclic production systems -- those without circular conversion processes among goods -- are always viable, a condition that implies coherence. We characterise completely viable systems through input restrictions demonstrating that prohibiting consumption goods as inputs for other consumption goods is necessary for ensuring viable prices exist for all consumption good price vectors. The analysis reveals fundamental relationships between production system architectural design and economic sustainability. The introduced framework bridges Leontief-Sraffa production theory with modern network economics while capturing institutional realities of contemporary production systems. This also results in a contribution of the literature on the existence of a positive output price system and the Hawkins-Simon condition.

Date: 2025-12
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2512.24777

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