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What drives markups? Evolutionary pricing in an agent-based stock-flow consistent macroeconomic model

Listed author(s):
  • Pascal Seppecher

    ()

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

  • Isabelle Salle

    ()

    (Utrecht University, School of Economics)

  • Marc Lavoie

    ()

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

This paper studies coordination between firms in a multi-sectoral macroeconomic model with endogenous business cycles. Firms are both in competition and interdependent, and set their prices with a markup over unit costs. Markups are heterogeneous and evolve under market pressure. We observe a systematic coordination within firms in each sector, and between each sector. The resulting pattern of relative prices are consistent with the labor theory of value. Those emerging features are robust to technology shocks.

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Paper provided by Centre d'Economie de l'Université de Paris Nord in its series CEPN Working Papers with number 2017-03.

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Length: 60 pages
Date of creation: Jan 2017
Handle: RePEc:upn:wpaper:2017-03
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  1. Seppecher, Pascal, 2012. "Flexibility Of Wages And Macroeconomic Instability In An Agent-Based Computational Model With Endogenous Money," Macroeconomic Dynamics, Cambridge University Press, vol. 16(S2), pages 284-297, September.
  2. Seppecher, P. & Salle, I. & Lang, D., 2016. "Is the Market Really a Good Teacher?," CeNDEF Working Papers 16-04, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  3. Dosi, Giovanni & Fagiolo, Giorgio & Roventini, Andrea, 2010. "Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1748-1767, September.
  4. Mandel, Antoine & Landini, Simone & Gallegati, Mauro & Gintis, Herbert, 2015. "Price dynamics, financial fragility and aggregate volatility," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 257-277.
  5. Seppecher, P. & Salle, I. & Lang, D., 2016. "Is the Market Really a Good Teacher?," CeNDEF Working Papers 16-04, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  6. Dawid, H. & Harting, P. & Neugart, M., 2014. "Economic convergence: Policy implications from a heterogeneous agent model," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 54-80.
  7. 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.
  8. Caiani, Alessandro & Godin, Antoine & Caverzasi, Eugenio & Gallegati, Mauro & Kinsella, Stephen & Stiglitz, Joseph E., 2016. "Agent based-stock flow consistent macroeconomics: Towards a benchmark model," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 375-408.
  9. Assenza, Tiziana & Delli Gatti, Domenico & Grazzini, Jakob, 2015. "Emergent dynamics of a macroeconomic agent based model with capital and credit," Journal of Economic Dynamics and Control, Elsevier, vol. 50(C), pages 5-28.
  10. Giovanni Dosi & Marcelo C. Pereira & Maria Enrica Virgillito, 2015. "The footprint of evolutionary processes of learning and selection upon the statistical properties of industrial dynamics," LEM Papers Series 2015/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  11. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275, July.
  12. Luca Riccetti & Alberto Russo & Mauro Gallegati, 2015. "An agent based decentralized matching macroeconomic model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(2), pages 305-332, October.
  13. Pasinetti, Luigi L, 1988. "Growing Subsystems, Vertically Hyper-integrated Sectors and the Labour Theory of Value," Cambridge Journal of Economics, Oxford University Press, vol. 12(1), pages 125-134, March.
  14. Stephen Kinsella & Matthias Greiff & Edward J Nell, 2011. "Income Distribution in a Stock-Flow Consistent Model with Education and Technological Change," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(1), pages 134-149.
  15. Roberto Mazzoleni & Richard R. Nelson, 2013. "An interpretive history of challenges to neoclassical microeconomics and how they have fared," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1409-1451, December.
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