Tag Archives: rent

This post begins the presentation of an example in which extensive and intensive rent can both arise. I do not consider external intensive rent or joint production in general. Kurz and Salvadori (1995), in section 2.2 of Chapter 10, have a more general model that includes external extensive rent and joint production. It does not allow for more than one agricultural commodity, although they treat that in problems, with examples from the literature. Perhaps developing this example will help...

Figure 1: An Example of the Reswitching of the Order of Fertility1.0 Introduction Nobody has ever pointed out the possibility highlighted by this post, as far as I know. This post can be contrasted with this one. Talk of "switch points" and "reswitching" for the wage curves on the left pane in Figure 1 above is, arguably, an abuse of terminology. Quantity flows do not change around the switch points. The same lands are fully farmed, and the same land that is partially farmed has the same...

Increasing asymmetry of income and wealth, which now goes by the name "inequality" as the buzzword, arises either from the function of perfect markets or from asymmetry of power. A perfect market is one in which there is no asymmetry, that is, the agents are homogenous.A perfect market could generate asymmetry through difference in ability that lead to differences in distribution owing based on merit and just deserts (as conventional economics assumes). However, perfect markets don't exist...

The banking and finance royal commission has cast light on a new type of poverty to emerge in our society: middle class poverty. To understand it, we have to go back to an earlier government inquiry: the 1972 Commission of Inquiry into Poverty, conducted by Professor Ronald Henderson. That commission had no real policy impact, but its cultural impact was profound. It gave prominence to the Henderson Poverty Index: a measure of consumption described by Henderson as so austere that it was...

I came across the following graph: (Click to embiggen) Both the supply curve for labor in the state of California and the demand curve for housing in California are made up of the states residents. In general, if you increase the supply of something, all else being equal you bring down its price. On the other hand, if you increase the demand for something, all else being equal you increase its price. The graph above suggests that in California, two...