Abstract
An extended version of the Morrison restricted cost function is applied to an analysis of the supply side in an open economy (Ireland). Production location is a decision variable for firms supplying a world market. Firms choose the location of production and then the factor mix within each country. Long-run demand elasticities are calculated permitting output in individual countries, as well as the quasifixed factor capital, to adjust to their optimal level. When allowance is made for the possibility of changing the location of production, the elasticity of demand for domestic production factors is found to be high.
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