Equilibrium with Profit‐Rate Maximizing Producers

We consider a general equilibrium model with producers maximizing their profit rates and using some fraction of profit for investment. Under some assumptions a stationary equilibrium exists and, in the case of generalized Leontief technologies, the equilibrium prices can be found by means of the cost‐minimizing procedure. If at least one active producer uses some fraction of his profit for dividends, and therefore not investing all his profit, an equilibrium allocation is technologically inefficient. We also consider a multi‐regional variant of the model and study the existence of the equilibrium problem from another point of view. Namely, we fix wage rates in the regions and equalize labor demand and labor supply by varying the fractions of profit used for investment.