Constant returns to scale and economic theories of value
AbstractJointly with Erkko Etula, Paul Samuelson  claims that the “Leontief – Sraffa matrix equations for input/output must obey constant returns to scale”. However, in an unrelated work, Amartya Sen  claims that Sraffa’s  “analysis does not need any assumption of constant returns to scale.” In fact, Sraffa’s model cannot satisfy this property because it is impossible to define constant returns to scale in it. This claim is considerably stronger than Sen’s. The property of constant returns to scale is significant because it constitutes a line of demarcation between distinct, though interrelated, economic theories of value. (96 words)
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5306.
Date of creation: 2007
Date of revision:
Constant returns to scale; Theory of Value; Relations of production; Counterfactual information; Exchange Values; Classical Political Economy; Neoclassical theory; Leontief technology;
Find related papers by JEL classification:
- B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
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- NEP-ALL-2007-10-20 (All new papers)
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- Nadeem Naqvi, 2011. "Demystifying Sraffa’s Theory of Value in the Light of Arrow and Debreu," MAGKS Papers on Economics, Philipps-UniversitÃ¤t Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201150, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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