A dynamic linear economy with characteristic-based endogenous technical coefficients

We develop a characteristic-based model for the endogenous determination of technical coefficients in a linear economy and use it to describe the dynamics of the economy as driven by changes in knowledge. The use of the characteristic approach to determine technical coefficients makes our model suitable to be interpreted as a first attempt towards the formulation of a formal knowledge-based model of technology.

► The paper develops a characteristic-based model of linear technologies. ► The model allows a procedure-centered representation of technology via capabilities. ► Long period production prices and distribution are determined. ► A dynamic version of the model is provided. ► The dynamic model describes the evolution driven by dynamic capabilities.