Further Reflections on the Corn–Guano Model

The corn–guano model is the simplest model with exhaustible resources. On the constant rate of profit hypothesis, a change of the numeraire from corn to corn‐and‐labour affects the price trajectories. In particular, the corn price at the exhaustion date is no longer equal to its long‐term level. The system of intertemporal prices admits one degree of freedom. Only one path, called the natural path, admits a positive price, wage and royalty for any number of periods before exhaustion. But, for a given exhaustion date, the non‐natural paths close to it are also associated with positive prices, wages and royalties. In this paper we study the characteristics of the natural path and the properties of the non‐natural paths. The results are partly extended to multisector models.