Cooperative production under diminishing marginal returns: interpreting fixed-path methods (Q2460082)

This article investigates the fixed-path methodology for studying cooperative production models. The paper begins with an overview of the literature and background information on the fixed-path method, the partnership problem and the inverse marginal product proportions mechanism. This is followed, in section 3, with a presentation of the fixed-path method in the context of a single technology model. The fourth and fifth sections constitute the main core of this article and focus on the relationship of fixed-path methods with the inverse marginal product proportions mechanism and a discussion on the appeal of this mechanism as a compromise between simplicity and responsiveness to capital contributions. Several theorems and propositions are presented, with proof, throughout this article, which concludes with a very useful list of relevant references.