An Alternative Pricing Explanation
In chapters 1 and 2 we expressed extreme scepticism about the possibility of prices becoming established in the manner outlined by the neoclassical theory of supply and demand. It was for this reason that we chose to look upon supply and demand as confirming relationships, and used the concepts of ‘necessary’ prices and then a mark-up of prices over costs in working out the pricing relations in chapters 4 and 5. In this chapter we try to outline an alternative explanation of the determination of prices for the post-Keynesian model and to investigate the implications of such an approach. The basis of the approach is Kalecki’s theory of the degree of monopoly and, in addition, it also draws heavily on entrepreneurial expectations and normal values.
KeywordsInvestment Decision Real Wage Capacity Utilisation Consumption Good Investment Plan
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