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Classical and Neoclassical Elements in Industrial Organization


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  • Mark Glick

    (University of Utah)

  • Eduardo M. Ochoa

    (California State University, Los Angeles)

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    Industrial organization studies of pricing are examined, focusing on the formative debates of 1950-70. It is argued that most of these studies unknowingly adopted a mixture of classical and neoclassical theory, leading to three types of confusions. First, over what measure of profitability is equalized in competitive equilibrium. Second, over what period of time profitability differentials must be studied. Third, over the correct conclusions to be drawn for industry phenomena from firm studies of profitability. The paper concludes by questioning the practicability of a purely neoclassical theoretical grounding for industrial economists, since they abandon this approach in their empirical work.

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    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 16 (1990)
    Issue (Month): 3 (Jul-Sep)
    Pages: 197-207

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    Handle: RePEc:eej:eeconj:v:16:y:1990:i:3:p:197-207

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    1. Novshek, William & Sonnenschein, Hugo, 1987. "General Equilibrium with Free Entry: A Synthetic Approach to the Theory of Perfect Competition," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 25(3), pages 1281-1306, September.
    2. Clifton, James A, 1977. "Competition and the Evolution of the Capitalist Mode of Production," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 1(2), pages 137-51, June.
    3. Hahn, Frank, 1982. "The Neo-Ricardians," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 6(4), pages 353-74, December.
    4. Shaikh, Anwar, 1978. "Political Economy and Capitalism: Notes on Dobb's Theory of Crisis," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 2(2), pages 233-51, June.
    5. Qualls, David, 1972. "Concentration, Barriers to Entry, and Long Run Economic Profit Margins," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 20(2), pages 146-58, April.
    6. MacAvoy, Paul W & McKie, James W & Preston, Lee E, 1971. "High and Stable Concentration Levels, Profitability, and Public Policy: A Response," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 14(2), pages 493-99, October.
    7. Kirman, Alan P., 2000. "Measure theory with applications to economics," Handbook of Mathematical Economics, Elsevier, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 1, chapter 5, pages 159-209 Elsevier.
    8. Dumenil G & Levy Dominique, 1984. "Dynamics of competition (the). a restoration of the classical analysis," CEPREMAP Working Papers (Couverture Orange) 8416, CEPREMAP.
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