Relative scarcity and uneven growth

Baumol has argued that problems experienced by cities in providing metropolitan services might be the product of an uneven growth process. Slow productivity growth sectors, he argues, could experience increased real costs and, unless demand for their service is highly inelastic, their outputs could decline severely. Looks at these issues in a framework which allows explicitly both for demand, for examination of the sources of productivity growth, and for substitution between productive factors. This extended framework allows for verification and extension of Baumol’s results. For instance, it is found that with uneven growth the relative price of the non‐progressive sector’s output will rise if that good is normal.