J. Frank Sharp, James C. Snyder, James H. Greene, A Decomposition Algorithm for Solving the Multifacility Production-Transportation Problem with Nonlinear Production Costs, Econometrica, Vol. 38, No. 3 (May, 1970), pp. 490-506

Let us consider first the theory. Here I find a fruitful complementarity. Adopting the model set forth in my equations (1)(25), Klotz presents in Section IV an argument based on my derivation (pp. 252-53) of the behavior of the elasticitv of supply, that elasticity decreases over the entire range of increasing enlistment, rather than first increasing and then decreasing with increasing military wage offers. He then derives an a priori estimate, consistent with an amendment of my empirical estinmate, of the decreasing elasticity in the range necessary to stock a 2.65 million-man force. This is an interesting exercise, and I believe a real contribution to the theory of military manpower supply. Further, the initial argument that a first increasing then decreasing elasticity is generated by a normal, not lognormal, distribution of expected civilian alternatives (and preferences) is correct. Although I don't agree with the suggestion that our observations (and still less our projected observations) are likely to lie on the increasing elasticity segment of such a supply curve,' the problem is, as Klotz points out, easily avoided by returning to the original specification of an underlying lognormal distribution of alternatives (and preferences). This I now do, to present a rigorous proof of the decreasing elasticity property of supply. As before, let us define elasticity