Sraffa,s Equations with Land
Let us suppose that commodity n is corn produced by two processes and that λjn denotes the quantity of land used in process n j, (j = 1,2). The price equations are the following:
The price (πs) is not a price of production.
The ratio ρj (t)∕π3 (t) defines the rate of return to the capital invested in a type of land in period t. Equation (3) sets this rate equal to the general rate of profit, which is a given constant. If the conditions (1) and (2) are persistent, the price (π j) derived from (1), (2) and (3) can be interpreted as a perpetual annuity capitalized at a constant rate of discount, equal to the rate of profit.Equation (2), after substitution of pj with (3), can be written8
where land appears on both sides of the equation, which means that land is an input and a joint product, respectively.
4.2