Network methods in models of production

Abstract

The author explores the ground common to the theories of electrical networks and economic networks by generalizing the notion of a Kirchhoff network of multiterminal elements to that of a Leontieff network of multiterminal elements. In this context the author introduces Le Chatelier's principle and proves a converse t o it, derives a generalization of Tellegen's theorem, and discusses the inheritance by a composite element of the properties of its constituent elements. Two types of maximizing firms are then treated as multiterminal elements; the preceding theory is applied to them and to composite firms constructed from them.