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- Title
AN ERROR IN RICARDO'S EXPOSITION OF HIS THEORY OF RENT.
- Authors
Johnson, Harry G.
- Abstract
The article presents a criticism on the exposition of David Ricardo, a well-known economist on his theory of rent. In order to calculate Ricardian rent it is necessary first to translate from cost per unit of output to output per unit of cost, and second to sum the differential productivities of the intra-marginal units over the productivity of units applied at the margin. The proposition advanced by Ricardo is theoretically quite valid, since it is possible for a fall in money rent, caused by the introduction of an improvement, to be offset by the reduction of the price of the product as a result of the same improvement, leaving rent expressed in terms of the product unchanged. But his example is erroneous, and fails to illustrate his proposition. On the contrary, it illustrates an alternative case in which the introduction of an improvement leaves money rent unchanged, while its value in terms of the product rises as a result of the increased productivity of capital employed.
- Subjects
RENT (Economic theory); THEORY; EXHIBITIONS; RICARDO, David, 1772-1823; ECONOMISTS; ECONOMICS
- Publication
Quarterly Journal of Economics, 1948, Vol 62, Issue 5, p792
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883475