On differential rent in the coal industry of the USSR

Abstract

Differential rent should benefit the state. If differential rent were to remain in the mine that produces it, it would result in it receiving unjustified profits, an excessively high profitability as a result of better natural conditions, and not as a result of savings, the use of new technology and improved organization of production. In addition, receiving high profits would not stimulate mines to further struggle to reduce production costs and increase profitability. On the other hand, the mine that operates under worse natural conditions, the cost of coal of which is significantly higher than the selling price, should receive a significant state subsidy. Such a mine would be deprived of the incentive to strive for profitability, since its loss is covered by the state. Thus, the establishment of selling prices and the consideration of differential rent are of great importance for improving the quality of work of each mine and the entire coal industry as a whole.