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Extra info for The Economics of Michał Kalecki
Example text
For whilst, as shown in note 1, the degree of monopoly theory can easily Prices, Profits and the Degree of Monopoly 35 be extended to cover the case of average variable costs which are not constant, the theory of perfect competition cannot be amended to allow for constant average variable costs. A third response is that the mark-up is not expected to tend to zero as the degree of monopoly tends to zero. Kalecki argued that there was an influence of overhead costs (including capital costs) on the mark-up (a point to which we return below).
There is one technological assumption (excess plant capacity) and one postulated behavioral relation (mark-up pricing). Beyond this, Kalecki's theory follows entirely from the defined break down of income' (Ferguson, 1969). Two points on this. First, the behavioural relation ensures that Kalecki's approach is a theory and not a tautology. g. g. profit maximisation) . Specifically Ferguson's preferred theory of marginal productivity fits into this pattern. 42 The Economics of Michal Kalecki 4. For further discussion on this point, see Reynolds (1983).
95'. Hence here again a form of mark-up pricing applies. g. Johnson, 1973). 2') k=(e-l) je. We make three comments on this line of argument. First, although it is called a degree of monopoly theory, it would be more accurate to call it a degree of oligopoly theory, which Kalecki did on occasions. A simple monopoly case (in the sense of a single firm) can be considered as a special case of more general oligopoly situations, when the number of firms dwindles to one and hence there is no interdependence to consider.