tag:blogger.com,1999:blog-26706564.post6778757999031953407..comments2024-03-25T07:51:47.758-04:00Comments on Thoughts On Economics: Therefore I Ain't Got No Money To Pay The RentRobert Vienneauhttp://www.blogger.com/profile/14748118392842775431noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-26706564.post-44750109190021965262008-01-29T09:49:00.000-05:002008-01-29T09:49:00.000-05:00The second comment wasn't about the non-substituti...The second comment wasn't about the non-substitution theorem. It was about joint production.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-26706564.post-89493111649398648432008-01-29T04:46:00.000-05:002008-01-29T04:46:00.000-05:00YouNotSneaky misunderstands. The so-called non-sub...YouNotSneaky misunderstands. The so-called non-substitution theorem is not like the Coase theorem. It has a statement to go along with the name.Robert Vienneauhttps://www.blogger.com/profile/14748118392842775431noreply@blogger.comtag:blogger.com,1999:blog-26706564.post-46769704204007128862008-01-28T13:19:00.000-05:002008-01-28T13:19:00.000-05:00Ah, I see. But then I'm not clear on something. He...Ah, I see. But then I'm not clear on something. Here land is essentially associated with a particular technique of production. In fact, you could pretty much say it is a technique of production, except for that its total stock is finite (which is where the sort of decreasing returns come in). So wouldn't that mean that all your standard linear production model of the sort you've been presenting involve joint production?<BR/><BR/>You got corn, labor and seed corn and two techniques of production. First one uses some ratio of seed corn and labor to produce corn and also a good called "the ability to use this technique again" (here relabeled "land")? The second one uses some other ratio of seed corn and labor to produce corn and also a good called "the ability to use this technique again".<BR/><BR/>This is sort of what I mean by that here land sort of disappears as a factor of production. I think for it to truly be a factor you do need that intensive margin.<BR/><BR/>At least as far as I'm understanding this. I could very well be misunderstanding it.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-26706564.post-35906132159396537742008-01-28T03:43:00.000-05:002008-01-28T03:43:00.000-05:00Land is a case of joint production. In the example...Land is a case of joint production. In the example, the inputs to a production process are so much of a certain grade of land, labor, and (seed) corn. The outputs are corn and that same amount of the same grade of land. The so-called non-substitution theorem assumes no joint production. So, for this reason alone, that theorem does not apply.<BR/><BR/>In the example, production cannot be expanded indefinitely on a single grade of land. Eventually, both grades of land need to be used. And after a certain point, production cannot be expanded any more at all. I would say Constant Returns to Scale do not prevail in the example, and the example is in the spirit of the Ricardo quote I give.<BR/><BR/>If more than one process is known for a given grade of land, the possibility of an intensive margin arises. I don't fully understand an analysis that combines both intensive and extensive margins in a linear production model. But, in any case, I think the location of the margin is endogenous in the analysis of distribution.Robert Vienneauhttps://www.blogger.com/profile/14748118392842775431noreply@blogger.comtag:blogger.com,1999:blog-26706564.post-84171553272751525752008-01-27T19:48:00.000-05:002008-01-27T19:48:00.000-05:00"Only one production process is known for producin..."Only one production process is known for producing corn on each grade of land."<BR/><BR/>How crucial is this for the result? My sense is that this basically eliminates land as a non produced factor of production, leaving only labor, which lets the non-substitution theorem to go through, which the whole thing hinges upon.<BR/><BR/>Also - this one I'm not so sure about - it seems like the technology is constant returns (also needed for the non-substitution theorem) which makes this somewhat non-Ricardian since there the key is decreasing returns.YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.com