Matter Matters: Productivity, Profit, and Non-Marginal Factor Prices
University of Stuttgart - Institute of Economics and Law
October 20, 2011
Tastes and technology are the ultimate givens of standard economics. Their interaction is mediated by the marginal principle. This approach is unsuitable to explain the nature and magnitude of overall profit and its distribution within the business sector. The present paper therefore takes a quite different analytical route. The standard behavioral axioms are replaced by objective structural axioms and the standard production function is replaced by a sequential production function. From this new formal basis two exemplary factor prices, the product price, and the real wage are derived under the conditions of market clearing and equal profit ratios.
Number of Pages in PDF File: 21
Keywords: new framework of concepts, structure-centric, axiom set, factors of production, substitution, profit redistribution, bargaining margin, equal profit ratios, metachoice
JEL Classification: D24, D33
Date posted: October 21, 2011 ; Last revised: May 6, 2015