If there are increasing returns to scale in both sectors (in a 2x2x2x2) production and consumption economy, then a profit maximizing allocation most likely involves the economy producing only one type of good?
$\begingroup$
$\endgroup$
$\begingroup$
$\endgroup$
"Most likely" is not a precise term.
Given the available information it is quite possible that an equilibrium does not exist. In that case we can't really tell what will happen.
