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Monopolistic Competition and Effective Demand. (PSME-6)

Monopolistic Competition and Effective Demand. (PSME-6)

Copyright Date: 1975
Pages: 160
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  • Book Info
    Monopolistic Competition and Effective Demand. (PSME-6)
    Book Description:

    While traditional price theory has successfully elucidated national income distribution in a perfectly competitive economy, little is known today about the overall working of a noncompetitive economy. This book moves to remedy the imbalance by sketching a general equilibrium theory of a noncompetitive economy.

    Developing his theory in the world of the standard Leontief system, Hukukane Nikaido attempts to construct objective demand functions reflecting the interdependence of economic agents in the real world upon which the monopolist's control of prices or output ultimately depends.

    Originally published in 1975.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-7054-7
    Subjects: Economics

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Preface
    (pp. v-vi)
    H. N.
  3. Table of Contents
    (pp. vii-2)
  4. CHAPTER I Monopolistic Competition and General Equilibrium
    (pp. 3-16)

    The theories of monopolistic or imperfect competition have been well evolved and elaborated through the works of J. Robinson [20], E. H. Chamberlin [3], H. von Stackelberg [21], and others ever since that of A. Cournot [5]. Their works analyze not only the monopolistic or monopolistically competitive behavior of a single firm but also the equilibrium situation of a monopolistically competitive market involving several firms.

    Nonetheless, illuminating though the achievements of these authors are, we remain dissatisfied with the present status of our knowledge about monopolistic competition. For even though market equilibria are analyzed, the analyses are worked out from...

  5. CHAPTER II Surplus Value in the Leontief System
    (pp. 17-29)

    In the standard Leontief system ofngoods andnsectors let

    A = (aij) = the input coefficients matrix, square of thenth order and nonnegative, which will be assumed to be indecomposable whenever necessary;

    c = (Ci) = the final demand vector,n-dimensional and nonnegative;

    ν = (νj) = the value added per unit output vector,n-dimensional and nonnegative;

    ν = (xj) = the output vector,n-dimensional and nonnegative;

    p = (pi) = the price vector,n-dimensional and nonnega tive.

    Throughout in this work, the Leontief system is assumed to be viable enough to produce a positive...

  6. CHAPTER III Objective Demand Functions
    (pp. 30-59)

    The foregoing analysis, which is worked out in terms of the labor and surplus values in Chapter II, by no means intends to give a description of what is going on as economic phenomena in the orthodox sense. It simply describes what is going on in terms of the labor value behind the scenes of economic phenomena. The behaviors of economic agents such as capitalists and workers are very likely to be based on something on the surface of the interplay of prices, rather than on the labor value concept beneath it. Nonetheless, whatever behavioral principles may bring about a...

  7. CHAPTER IV Monopolistically Competitive Pricing Modes and the Objective Demand Functions
    (pp. 60-73)

    It is important to recall that the working of the economy, if its bare aspects are boldly viewed, relies heavily upon such a function of the market price mechanism as to regulate the supply of laborL(p,1) and the real wage bill by commodity breakdownF(p,1) necessary for the full employment thereof. Once the price system is determined in one way or another, the capitalist class can choose a final demand vectorcfrom among the possibility setC(π), whether or not the choice is made through the market price mechanism. There fore the market price...

  8. CHAPTER V Welfare Aspects of the Price Mechanism
    (pp. 74-82)

    As was elucidated in the preceding sections and empha sized especially in the opening part of IV. 1, the working of the economy heavily relies upon such a function of the market price mechanism as to regulate the supply of laborL(p,1) and the real wage bill by commodity breakdownF(p,1) necessary for the full employment of all the labor supply. The market price mechanism is indispensable for the economy to achieve at least the allocation of labor and the distribution of the resulting output in terms of labor values between the working and capitalist classes...

  9. CHAPTER VI Objective Demand Functions in the Presence of Capacity Limits
    (pp. 83-106)

    It has been assumed in the foregoing analysis that only labor, the unique primary factor of production, is binding in the economy’s production activities. The results in the preceding chapters remain valid even in the presence of production capacity limits, so long as there are idle excess capacities, with only labor being a binding factor.

    Nonetheless, other capacity limits can possibly be binding sometimes, while labor becomes redundant. This chapter reconsiders the construction of objective demand functions worked out on the assumption of a single binding factor, labor, in Chapter III, so as to reconstruct them in the presence of...

  10. CHAPTER VII Monopolistically Competitive Pricing Modes and the Objective Demand Functions, Continued
    (pp. 107-123)

    The objective demand functions have been constructed on the assumption that not only workers but also capitalists’ households behave as price-takers. Nonetheless, the capitalists as entrepreneurs do behave more or less as price setters. The price system, which regulates the workers’ supply of labor and demand for goods, is determined by the capitalists’ price-setting behaviors and the interactions thereof subject to certain constraints, including the objective demand functions. A specific one of possible alternative modes of monopolistic competition singles out a point as a final market equilibrium on the objective demand schedules, along which the markets of all the goods...

  11. CHAPTER VIII Welfare Aspects of the Price Mechanism, Continued
    (pp. 124-138)

    As has been brought to light in Chapter V, the allocation of labor and distribution of product among workers and capitalists implemented by the price mechanism achieve a Pareto optimum in the absence of capacity limits, if and only if the prices of goods coincide with their labor values and there is no surplus value, or equivalently, there are no profit incomes. In the absence of capacity limits, the only owners of factors that bind production are workers who own themselves as human capital, while capitalists own no binding factors. This situation specifies the competitive equilibrium to a situation of...

  12. Provisional Epilogue
    (pp. 139-140)

    The present work is only a prelude to a general equilibrium theory of monopolistic competition from the notional point of view. Its primary purpose is to study how monopolists are mutually interdependent. The interdependence in question is not what the traditional oligopoly theorist has in mind in special regard to entrepreneurial behaviors, but the national economy-wide objective framework of interdependence to which the monopolists must be subjected. It binds the monopolists’ potential behaviors, including their control of resource allocation and income distribution. It exists independently of the monopolists’ perceptions and conjectures and embeds any possible monopolistically competitive equilibrium.

    To recapitulate...

  13. Appendix
    (pp. 141-144)
  14. References
    (pp. 145-148)
  15. Index
    (pp. 149-150)
  16. Back Matter
    (pp. 151-151)