RE: [OPE] constant returns to scale

Yes they generally do. For the purposes of pragmatic planning this may be
OK, but it does raise the question of whether it would be possible to use
the mechanism of a closely regulated and managed market to do a better job -
at least until system-induced and actual scarcity have been overcome.

michael

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Dr Michael Williams, BA, MSc, PhD

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From: ope-bounces@lists.csuchico.edu [mailto:ope-bounces@lists.csuchico.edu]
On Behalf Of GERALD LEVY
Sent: 01 October 2008 16:09
To: Outline on Political Economy mailing list
Subject: RE: [OPE] constant returns to scale

> Measuring marginal costs is impractical centrally or in a de-centralized
fashion,

> because they vary with level of output. You can assume this away and then

> assume constant returns to scale, so that MC = Average Cost, but this
then has

> none of the efficiency advantages of MC pricing. This is quite independent
of the

> incentive problems to which you refer.

Hi Michael W:

Yes, but don't most Marxian models also assume constant returns to scale?

I suppose this would be legitimate in a static model, but surely any

truly dynamic model of growth and capital accumulation must not assume

this. This must be the case since technological change in means

of production and the processes of the centralization and concentration

of capital require (and, indeed, express) economies of scale.

In solidarity, Jerry

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Received on Wed Oct 1 11:44:53 2008