IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/64406.html
   My bibliography  Save this paper

Full cost, profit et concurrence
[Full cost, Profit and Competition]

Author

Listed:
  • Jael, Paul

Abstract

During the marginalist controversy, full costers failed to convince economists of the superiority of full cost pricing over marginal theory of imperfect competition. The controversy was closed prematurely; various contributions published immediately thereafter in the fifties did not renew the debate despite their relevance. Topics included entry prevention, target rate of profit and the emergence of the market price. The present paper shows that the full cost pricing is not so justified by the need for a rule of thumb than as a rational behaviour aiming at long term profit maximisation, especially in the case of highly competitive markets with few suppliers. The paper focuses also on the relationship between full cost pricing and changes in demand (mostly cyclical). It is also shown that the race for performance deserves a central position in the analysis of competition; it is too often neglected in favour of the sole competition on margins.

Suggested Citation

  • Jael, Paul, 2014. "Full cost, profit et concurrence [Full cost, Profit and Competition]," MPRA Paper 64406, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:64406
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/64406/3/MPRA_paper_64406.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. H. R. Edwards, 1955. "Price Formation In Manufacturing Industry And Excess Capacity," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 94-118.
    3. Philippe Mongin, 1990. "The Early Full-Cost Debate and the Problem of Empirically Testing Profit Maximization," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 13(2), pages 236-251, December.
    4. F. S. Lee & J. Irving-Lessmann, 1992. "The Fate of an Errant Hypothesis: The Doctrine of Normal-Cost Prices," History of Political Economy, Duke University Press, vol. 24(2), pages 273-309, Summer.
    5. Godley, Wynne A H & Nordhaus, William D, 1972. "Pricing in the Trade Cycle," Economic Journal, Royal Economic Society, vol. 82(327), pages 853-882, September.
    6. Machin, Stephen & Van Reenen, John, 1993. "Profit Margins and the Business Cycle: Evidence from UK Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 29-50, March.
    7. Franco Modigliani, 1958. "New Developments on the Oligopoly Front," Journal of Political Economy, University of Chicago Press, vol. 66(3), pages 215-215.
    8. Philippe Mongin, 1992. "The “Full-Cost” Controversy of the 1940s and 1950s: A Methodological Assessment," History of Political Economy, Duke University Press, vol. 24(2), pages 311-356, Summer.
    9. Yossi Spiegel & Konrad Stahl, 2014. "Industry Structure and Pricing Over the Business Cycle," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 5, pages 115-140, World Scientific Publishing Co. Pte. Ltd..
    10. Lee,Frederic S., 2006. "Post Keynesian Price Theory," Cambridge Books, Cambridge University Press, number 9780521030212.
    11. Stahl, Konrad & Spiegel, Yossi, 2014. "Industry structure and pricing over the business cycle," CEPR Discussion Papers 10009, C.E.P.R. Discussion Papers.
    12. Nubbemeyer, Elmar, 2010. "A Reconsideration of Full-Cost Pricing," Munich Dissertations in Economics 12313, University of Munich, Department of Economics.
    13. Bhagwati, Jagdish N, 1970. "Oligopoly Theory, Entry-prevention, and Growth," Oxford Economic Papers, Oxford University Press, vol. 22(3), pages 297-310, November.
    14. R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
    15. Rotemberg, Julio J, 1982. "Sticky Prices in the United States," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1187-1211, December.
    16. Spiegel, Yossi & Stahl, Konrad, 2014. "Industry structure and pricing over the business cycle," ZEW Discussion Papers 14-039, ZEW - Leibniz Centre for European Economic Research.
    17. Yossi Spiegel & Konrad O. Stahl, 2014. "Industry Structure and Pricing over the Business Cycle," CESifo Working Paper Series 4848, CESifo.
    18. J. N. Bhagwati, 1970. "Oligopoly Theory, Entry-Prevention and Growth," Working papers 47, Massachusetts Institute of Technology (MIT), Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jael, Paul, 2014. "Full Cost, Profit and Competition," MPRA Paper 59630, University Library of Munich, Germany.
    2. Jael, Paul, 2020. "A Rational Theory of Producer’s Equilibrium in Fifteen Principles," MPRA Paper 99456, University Library of Munich, Germany.
    3. Jael, Paul, 2015. "Prix, taux de profit cible et prévention de l’entrée [Price, Target Rate of Profit and Entry Preventing]," MPRA Paper 69015, University Library of Munich, Germany.
    4. Jael, Paul, 2015. "Price, target rate of profit and entry preventing," MPRA Paper 65970, University Library of Munich, Germany.
    5. Lambertini, Luca & Marattin, Luigi, 2021. "On prices’ cyclical behaviour in oligopolistic markets," Research in Economics, Elsevier, vol. 75(1), pages 79-86.
    6. Bernhard Dachs & Martin Hud & Christian Köhler & Bettina Peters, 2016. "Employment Effects of Innovations over the Business Cycle: Firm-Level Evidence from European Countries," DEM Discussion Paper Series 16-20, Department of Economics at the University of Luxembourg.
    7. Calá, Carla Daniela, 2014. "Regional issues on firm entry and exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 2023, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    8. Bils, Mark & Chang, Yongsung, 2000. "Understanding how price responds to costs and production," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 52(1), pages 33-77, June.
    9. Calá, Carla Daniela, 2009. "Spatial issues on firm demography: an analysis for Argentina," Nülan. Deposited Documents 1379, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    10. Jamee K. Moudud, 2010. "Strategic Competition, Dynamics, and the Role of the State," Books, Edward Elgar Publishing, number 4241.
    11. Ghosal, Vivek, 2007. "Small is Beautiful but Size Matters: The Asymmetric Impact of Uncertainty and Sunk Costs on Small and Large Businesses," MPRA Paper 5461, University Library of Munich, Germany.
    12. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    13. Petros G. Sekeris & Kevin Siqueira, 2021. "Payoff-Improving Competition: Games with Negative Externalities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 455-474, May.
    14. Ricardo Paredes, 1986. "Una Revisión Crítica a la Literatura de Colusión," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 23(69), pages 173-200.
    15. Nitzan, Jonathan, 1992. "Inflation As Restructuring. A Theoretical and Empirical Account of the U.S. Experience," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 157989, July.
    16. Hiroshi Yoshikawa & Hideaki Aoyama & Yoshi Fujiwara & Hiroshi Iyetomi, 2015. "Deflation/Inflation Dynamics: Analysis based on Micro Prices ," CIRJE F-Series CIRJE-F-959, CIRJE, Faculty of Economics, University of Tokyo.
    17. Federico Etro, 2008. "Stackelberg Competition with Endogenous Entry," Economic Journal, Royal Economic Society, vol. 118(532), pages 1670-1697, October.
    18. Offerman, T.J.S. & Potters, J.J.M., 2000. "Does Auctioning of Entry Licences Affect Consumers Prices? An Experimental Study," Discussion Paper 2000-53, Tilburg University, Center for Economic Research.
    19. Adam Copeland & George Hall, 2011. "The response of prices, sales, and output to temporary changes in demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(2), pages 232-269, March.
    20. Antoniades, Alexis & Clerides, Sofronis & Xu, Mingzhi, 2023. "Multi-product firm price and variety response to firm-specific cost shocks," International Journal of Industrial Organization, Elsevier, vol. 90(C).

    More about this item

    Keywords

    prix; concurrence; structure de marché; full cost;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:64406. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.