On Counting Equations

Abstract

Productive Sraffa joint production systems are known to possess a number of properties which appear to be counterintuitive, if contrasted with single product systems: prices may fluctuate even if expressed in terms of the wage rate, they may turn negative, the standard commodity may not exist, etc. If joint production is, by contrast, approached in terms of inequalities (von Neumann’s method), positive prices and a tradeoff between real wages and the rate of profit obtain but the solution will in general not allow the activation of all processes, some commodities are overproduced and the resulting system of commodities with positive prices in activated processes need not be ‘quadratic’, i.e. the number of positive activity levels need not be equal to the number of positive prices in an optimal solution.

First published in Zeitschrift, für Nationalökonomie (Journal of Economics), 38 (1978), pp. 253–85.