Thursday, October 21, 2021

Some Kinds Of Rent

Special Cases in the Analysis of Rent
TypeLandAgricultural ProcessesIndustrial Processes
Extensive rentMultiple types of land, each of a given qualityFor a given type of land, one process producing corn is availableFor a given commodity other than corn, one process for producing it is available
Intensive rent properOne type of homogeneous landFor the given type of land, multiple processes are available for producing cornFor a given commodity other than corn, one process for producing it is available
External intensive rentOne type of homogeneous landFor the given type of land, one process for producing corn is availableFor a given commodity other than corn, multiple processes for producing it are available

Economists have explored several kinds of rent in post-Sraffian price theory (Kurz and Salvadori 1995: 279). Suppose, as a simplifying assumption, that one commodity, 'corn', can be produced on land. Land is a non-produced commodity that emerges from a production process unchanged. Furthermore, assume that no pure joint production occurs otherwise. Let requirements for use be specified as a vector of net outputs.

The table at the head of this post lists three kinds of rent. They are characterized by the appending of three additional assumptions. One assumption deals with whether all land is homogeneous, or whether multiple types of land exist. Another assumption states whether one or more than one process is known for operating on any of the given types of land. A final assumption concerns whether different processes are available to produce commodities that do not require direct inputs of land in their production.

As far as I know, a general model of rent, short of the general theory of joint production, has yet to be developed that considers the relaxation and mixing of these assumptions. Those building on the work of Alberto Quadrio Curzio, I guess, have a ways to go. (I have just started reading the reference below.) Absolute rent may be introduced by postulating persisting, non-uniform ratios of rates of profits across sectors. An obvious generalization would consider the possibility of producing more than one agricultural commodity. In a mixed model of extensive and intensive rent, more than one type of land would exist, and more than one production process would be available for at least some types of land. Furthermore, one might introduce fixed capital, thereby raising the question of the cost-minimizing choice of the economic life of machines.

My impression is that results of the circulating capital model generalize to simple models of extensive rent. The dependence of the price system on requirements for use in models of extensive rent, however, is an important difference in the models. Once one considers other types of rent or any of the above complications, issues that arise in general models of joint production also arise in models of rent. These issues include upward-sloping wage curves on the frontier and the non-uniqueness or the non-existence of a cost-minimizing technique at a given rate of profits.

  • Baranzini, Mauro L., Claudia Rotondo, and Roberto Scazzieri. 2015. Resources, Production and Structural Dynamics. Cambridge: Cambridge University Press.

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