Re: [OPE] marginal costs

I was trying to focus on a slightly different point:
The basic argument is that if you have a downward sloping demand curve,
the fall in price induced by putting one extra unit of the commodity on
the market will be exactly the same whether there is one producer or many.
So from that point of view it is invalid to treat the case of many
producers as any different from perfect monopoly.

Alejandro Agafonow wrote:
>
> Below you can find a citation which claims that this is not the case
> in capitalist markets, and I agree:
>
>
>
> From the view point of the ‘perfect’ competition fallacy, competition
> would be ‘perfect’ only if the entrepreneur were to expand the
> manufacture of each pattern up to the point in which the increment
> cost of production equals the marginal price that would be obtained on
> the market. Only then should he embark upon the production of a second
> pattern. […] In reality entrepreneur find it more profitable to stop
> producing a certain pattern before this point is reached and embarks
> upon the production of a second, a third, and many other patterns. He
> acts in this way because he wants to maximize his profits. (pp. 15)
> “Monopoly Prices”, /The Quarterly Journal of Austrian Economics/, vol.
> 1, nº 2, 1998. http://agentier.free.fr/mises.pdf
>
>
>
>
>
> But on the literature? You can find in every mainstream Microeconomics
> book just the opposite statement.
>
>
>
> I argue in my dissertation that this equalization is desirable, but
> only possible in a Market Socialism.
>
>
>
> Regards,
>
> A. Agafonow
>
> ------------------------------------------------------------------------
> *De:* Paul Cockshott <wpc@dcs.gla.ac.uk>
> *Para:* Outline on Political Economy mailing list <ope@lists.csuchico.edu>
> *Enviado:* lunes, 8 de diciembre, 2008 17:10:23
> *Asunto:* [OPE] marginal costs
>
> I seem to recall that a couple of years back there was discussion here
> refuting the following neo-classical position:
>
> "A competitive firm equates its marginal cost to the market price of
> its product. The equality of marginal cost and price is a fundamental
> efficiency condition for the allocation of resources. When the
> condition holds, the purchasers of the product equate their marginal
> rates of substitution to the corresponding marginal rates of
> transformation. By contrast, under monopoly or oligopoly, the
> allocation of output will be inefficient because price will exceed
> marginal cost."
>
> Can anyone remember it more precisely?
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Received on Tue Dec 9 06:51:41 2008