Mobile factor input

Problems with modeling
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Mobile factor input

Post by Fiskbullen » 3 months ago


We am struggling with an assignment in which we need to put the factor inputs as mobile and we are not sure how to do that. We removed the fixed value added (val.fx(i) = valo(i))
in the original model. We know that we should the subscript for the price as it allows different prices between the sectors, but we are not sure how to model it and how to continue from here.

We want the price between the industries to be able to change, but the number of labourers to fixed.


a) "n the model factor inputs are fixed by industry. Introduce now complete factor mobility. This requires a more serious change to the model in which industry-specific factor prices are replaced by one-factor price. Moreover, equilibrium on the factor market has to be modelled. (2 points)

I have also attached the gams file itself.

We have been stuck on this for a whole day and would really appreciate all help.
exercise age 1.gms
Gams file with all the code
(10.04 KiB) Downloaded 31 times

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