Constant returns to scale and economic theories of value
Jointly 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)
|Date of creation:||2007|
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