I am trying to determine the exact theoretical mechanism for a positive capital shock to create an increase in land price.
Assuming output is a function of land ($L$), labour ($N$) and capital ($K$) :
$$ Y = A f (L, N, K) $$
I am unsure if I am correct, but so far I have,
Positive capital shock -> increase in the MPK -> labour demand rises -> wage rises -> qty supplied of labour rises -> MPN rises -> with more workers available to work the land, each additional unit of land is able to produce more output -> MPL rises -> price of land rises.
If you know any papers that deal with this particular mechanism please let me know also.