Profit maximization, industry structure, and competition: A critique of neoclassical theory
AbstractNeoclassical 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.
Volume (Year): 370 (2006)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/
Microeconomics; Profit maximization; Competition; Monopoly; Oligopoly; Cournot–Nash game theory;
Other versions of this item:
- Steve Keen & Russell K. Standish, 2006. "Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory," Papers nlin/0604061, arXiv.org.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Keen, Steve, 2004. "Deregulator: Judgment Day for microeconomics," Utilities Policy, Elsevier, vol. 12(3), pages 109-125, September.
- Fernando Vega-Redondo, 1997.
"The Evolution of Walrasian Behavior,"
Econometric Society, vol. 65(2), pages 375-384, March.
- George J. Stigler, 1957. "Perfect Competition, Historically Contemplated," Journal of Political Economy, University of Chicago Press, vol. 65, pages 1.
- André Barreira da Silva Rocha, 2012.
"Evolutionary Dynamics of Nationalism and Migration,"
Discussion Papers in Economics
12/11, Department of Economics, University of Leicester, revised Jun 2012.
- Barreira da Silva Rocha, André, 2013. "Evolutionary dynamics of nationalism and migration," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(15), pages 3183-3197.
- Bell, William Paul, 2009. "Adaptive interactive expectations: dynamically modelling profit expectations," MPRA Paper 38260, University Library of Munich, Germany, revised 09 Feb 2010.
- Anglin, Paul, 2008. "On the proper behavior of atoms: A comment on a critique," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(1), pages 277-280.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.