Abstract

We develop a characteristic-based model for the endogenous determination of technical coefficients in a linear economy and use it to determine prices and distribution within a classical framework. The use of the characteristic approach makes our model particularly suitable to be interpreted in terms of the knowledge-based view of technology. Therefore, this work can be seen as an attempt towards a formalization of the recipe-based analysis of distribution and dynamics of technical coefficients (Dosi and Grazzi (2006)) via a rigorous development of von Tunzelmann’s extension to production of Sen’s capability approach (von Tunzelmann (2003)). A dynamic extension of the model is also provided which can be interpreted as describing the evolution of an economy driven by dynamic capabilities.