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"Market Constraints Upon Firms: Vulnerability" [2004] ELECD 200; in Minsky, P. Hyman; Papadimitriou, B. Dimitri (eds), "Induced Investment and Business Cycles" (Edward Elgar Publishing, 2004)

Book Title: Induced Investment and Business Cycles

Editor(s): Minsky, P. Hyman; Papadimitriou, B. Dimitri

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762164

Section: Chapter 7

Section Title: Market Constraints Upon Firms: Vulnerability

Number of pages: 17

Extract:

7. Market constraints upon firms:
vulnerability
In this chapter we wish to take up the effect of alternative market structures
upon the behavior of firms. Our aim is to develop a theory of the behavior
of the firm which enables us to determine whether or not the amount of
investment induced by changes in either cost or demand conditions
depends upon alternative market conditions. Our problem is how these
market structures affect the value of the accelerator coefficient. For our
purposes market structures can be divided into three classes: competition,
monopoly and the region in between, which is generally called oligopoly. In
addition to the demand curves confronting a firm or an industry, we have
available the modified cost curves (the iso-profit curves) which were derived
in Chapters 5 and 6. This apparatus enables us to use cost curves in a more
meaningful and systematic manner than they have been used to date in the
study of investment behavior.
The aim of this chapter is to prepare the ground for an investigation of
the relation between these alternative market structures and the effects of
shifts in product demand curves upon investment activity. We are not par-
ticularly interested in problems such as the relation between the price of
products and the quantities produced under these alternative market struc-
tures, nor are we concerned with the question as to whether or not the equi-
librium conditions derived for these alternative market structures closely
approximate or are widely divergent from the ...