Fred writes:
"Alan's argument does not demonstrate that simultaneously determined
prices CANNOT FUNCTION AS LONG-RUN CENTER-OF-GRAVITY PRICES.
All Alan's argument demonstrates is that simultaneously determined prices
CANNOT ACTUALLY EXIST AS MARKET PRICES IN TWO SUCCESSIVE PERIODS WHEN
THERE IS TECHNICAL CHANGE. ...
"First a brief summary of Alan's main argument (as I understand it):
"1. Alan assumes that the Sraffian equilibrium prices are the actual
market prices in each period, and thus that actual input prices =
actual output prices in each period."
Fred, I think you have NOT understood Alan's demonstration. Neither of his
alternatives (Figures 1 and 2) assume that the simultaneously determined
prices are the actual prices. Your point 1 doesn't even make sense. If
one were to assume that the simultaneously determined equilibrium prices
*are* the market prices, then they would also necessarily be long-run
centers of gravitation.
Ciao
Andrew Kliman