Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory
Neoclassical economics has two theories of competition between profit-maximizing firms (Marshallian and Cournot-Nash) that start from different premises about the degree of strategic interaction between firms, yet reach the same result, that market price falls as the number of firms in an industry increases. The Marshallian argument is strictly false. We integrate the different premises, and establish that the optimal level of strategic interaction between competing firms is zero. Simulations support our analysis and reveal intriguing emergent behaviors.
Year of publication: |
2006-04
|
---|---|
Authors: | Keen, Steve ; Standish, Russell K. |
Institutions: | arXiv.org |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Emergent Effective Collusion in an Economy of Perfectly Rational Competitors
Standish, Russell K., (2004)
-
A note on the role of energy in production
Keen, Steve, (2019)
-
The role of innovation in economics
Standish, Russell K., (2000)
- More ...