Temporal and thermodynamic irreversibility in production theory

Summary. The two notions of temporal and thermodynamic irreversibility are distinguished. It is shown that the irreversibility concept of Arrow-Debreu, while establishing temporal irreversibility, does not encompass thermodynamic irreversibility. This means, the standard irreversibility concept of production theory is too weak to be in full accordance with the laws of nature.Received: 8 October 2001, Revised: 5 April 2004, JEL Classification Numbers: D20,D51,D92.For helpful comments and discussion I am grateful to Malte Faber, Andreas Lange, Martin Quaas, Armin Schmutzler and seminar participants at Berkeley, Il Ciocco, Delft, Strasbourg and Rethymno.