Land Rents and Competitive Equilibrium

Martin Diedrich

No 272, Computing in Economics and Finance 2001 from Society for Computational Economics

Abstract: We study the technological pre-conditions for competitive equilibrium in a multisectoral economy where"land" is an essential imput. Earlier results by Bidard and Salvadori require either very low interest rates or are unable to predict the type of final demand vectors that can be supported by an equilibrium. We extend these earlier results and show that a given level and structure of final demand can be supported by equilibrium prices if there is a sufficiently strong substitution potential between labour and land inputs. Our proof is constructive: the equilibria we discuss can be computed by the Lemke Complementary Pivoting Algorithm.

Keywords: Multisectoral Models; Lemke Algorithm; Rent Theory (search for similar items in EconPapers)
JEL-codes: C61 D51 O41 Q24 (search for similar items in EconPapers)
Date: 2001-04-01
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