| Sumario: | This article focuses on the elasticity of derived demand for a factor of production under conditions of decreasing returns to scale. The smaller the elasticity, the stronger the trade union power may be expected to be in the industry. Recent studies have been conducted by several researchers on the generalizations on the Marshall-Hicks analysis into situations of multiplicity on the factors of production, allowing for various possibilities of substitution and complementary in production. While these studies were done in the context of a perfectly competitive industry, Patrick Yeung developed rules of derived demand in the context of imperfect competition. The traditional analysis is confined, however, to the assumption of constant returns. This assumption may be inappropriate for short-run analyses where some factors of production are temporarily immobile. If one is interested, therefore, in the short-run properties of the demand for factors of production, the assumption of decreasing returns may be more plausible.
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