Path stability of prices in a nonlinear Leontief model

In a nonlinear Leontief model where the input–output coefficients depend on the level of outputs, the dynamics of cost-determined prices is examined. It is shown that under mild assumptions path stability holds in the sense that every path when being disturbed comes finally arbitrarily close to its original form. Path stability may occur even if each single path shows chaotic behaviour. By sharpening the assumptions considerably, convergence of all paths may be achieved.