tag:blogger.com,1999:blog-6245381193993153721.post1078799709125586021..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: The Marginalist Pricing Controversy RevisitedLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-6245381193993153721.post-2152276394796188252014-05-01T09:04:49.210-07:002014-05-01T09:04:49.210-07:00There's a quote I'm looking for which is a...There's a quote I'm looking for which is along the lines of:<br />"The rentier will tolerate many things, but he will not tolerate 2 percent!"<br /><br />Can you find that quote?<br /><br />The businessman and the rentier both *demand* a particular rate of return on capital and will not tolerate a lower rate. Firms set prices in order to make this return.<br /><br />Basic principle of economics. Veblen apparently recognized this behavior -- and didn't condemn it, because he explains how a firm which doesn't do this gets chewed up.<br /><br />Failure to incoporate "mark-up pricing" is one of the reasons microeconomics is rotten. (There are several others: failure to incorporate marketing and product differentiation, for example.)Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-8421008454709042912014-04-15T09:24:34.066-07:002014-04-15T09:24:34.066-07:00Very interesting.
In response to (1), in mark-pri...Very interesting.<br /><br />In response to (1), in mark-pricing models to markets equilibriate where MR = MC or are in motion towards such equilibrium (since some market imperfection may prevent them from meeting)JoeMachttps://www.blogger.com/profile/12650518988624821388noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-15088851345880639552014-04-15T08:33:01.110-07:002014-04-15T08:33:01.110-07:00(1) mark-up pricing does not assume zero or very l...(1) mark-up pricing does not assume zero or very low marginal costs. <br /><br />It does observe that many firms report flat marginal/average variable costs.<br /><br />(2) It makes various predictions (on the basis of empirical evidence): e.g., the standard mark-up pricing firm would cut production and employment in recessions, not prices; mark-up prices are market clearing prices etc.<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-9456807173020017592014-04-15T08:27:46.933-07:002014-04-15T08:27:46.933-07:00Two quick questions.
Does the theory of mark-up p...Two quick questions.<br /><br />Does the theory of mark-up pricing assume zero or very low marginal costs?<br /><br />Also, does the theory of mark-up pricing have empirical predictions (aside from how firms actually go about setting prices) or practical applications that yield different results from neoclassical pricing theory.JoeMachttps://www.blogger.com/profile/12650518988624821388noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-77230903156475442132014-04-12T10:25:20.716-07:002014-04-12T10:25:20.716-07:00One question is what exactly Friedman does think c...One question is what exactly Friedman <i>does</i> think constitutes empirical evidence in favour of/against the marginalist model of the firm. As it stands, he has referenced no evidence and made no falsifiable predictions. So he fails even on his own terms. Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-28642398193696994472014-04-12T10:09:16.556-07:002014-04-12T10:09:16.556-07:00At any rate, I'll repost my reply:
Or the Sun...At any rate, I'll repost my reply:<br /><br />Or the Sun causes business cycles?<br /><br />As in William Stanley Jevons' "Commercial crises and sun-spots," Nature 19 (1878), pp. 33–37?:<br /><br /><i>"In a relatively minor work, "Commercial Crises and Sun-Spots", Jevons analyzed business cycles, proposing that crises in the economy might not be random events, but might be based on discernible prior causes. To clarify the concept, he presented a statistical study relating business cycles with sunspots."</i><br />http://en.wikipedia.org/wiki/William_Stanley_Jevons#Practical_economics<br /><br />To be fair to Jevons, though wrong, perhaps it was not as crazy as it sounds at first:<br /><br /><i>"To clarify the concept, he presented a statistical study relating business cycles with sunspots. His reasoning was that sunspots affected the weather, which, in turn, affected crops. Crop changes could then be expected to cause economic changes. Subsequent studies have found that sunny weather has a small but significant positive impact on stock returns, probably due to its impact on traders' moods"</i>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-84014868901506100972014-04-12T10:08:25.037-07:002014-04-12T10:08:25.037-07:00Apologies, Philip, I accidentally deleted your com...Apologies, Philip, I accidentally deleted your comment and my original replyLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.com