Project evaluation with crowding out effects

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1989-03-01
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Van de Wetering, H. Ike
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Abstract

Consider the technically feasible project (AX; AX^^; AX^) * Project output AX is achieved using a technology requiring the use of AX^ of input 1 and the quantity AX2 of input 2, If the project is scale neutral then we may write the technology of the project as (1; AX^^/^; ^2/^) where th latter ratios are input-output coefficients.-^ Both the scale and the input-output ratios are chosen autonomously but not arbitrarily. Typically the project output-input vector will reflect specific technological innovations such that it is not a subset of the currently known industry production function or technology set. The choice of project scale and s. ' * * technology reflects the (economic) rationality of the agency that proposes the project.

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