INPUT DEMAND FUNCTIONS IN THE THEORY OF PRODUCTION
by
Andrés Vázquez (* *)
I. Introduction
      Among the subjects under discussion in the literature is the formal analogy between the consumer and production theories. In particular, several authors believe that in the latter there is no relation similar to that known as the « Slutsky equation » in the theory of consumption. And yet, this and other relations analogous to those of the consumer demand were analysed by Mosak in 1938 [24].
      The basic difference between the theory of consumption and the theory of production lies in the different approach to their competitive equilibrium. While the aim of the consumer consists in maximizing his level of satisfaction subject to a given income, the purpose of the firm is to maximize its profit. But from the analytical standpoint it is usual to assume that the producer fixes the output or the production cost, and therefore the equilibrium is obtained by minimizing the expenditure in the first instance and by maximizing the output in the second case. Formally, this latter dual approach to the production equilibrium corresponds to the consumer one. As the author of this paper has shown [41], the effect of a change in the price of one factor can be split then into a pure substitution effect and a cost effect or, alternatively, an output effect, which are formally analogous to the substitution and income effects in the consumer choice. Only in this assumption a parallel case to the Giffen Paradox may appear (').
     (*) Instituto Nacional de Racionalización y Normalización. Patronato de Investigación Científica y Técnica Juan de la Cierva, Madrid.
     The author is deeply indebted to professor Tónu Puu for his helpful comments.
     (*) On the origin of this term, see [281, [361, and 1371.