Thursday, January 25, 2007

Steedman's Full Industry Equilibrium

Ian Steedman, over a couple of decades, has been considering a coherent comparative statics analysis of industries in equilibrium. He points out that all industries typically cannot be in equilibrium if just one input price, say, varies. More than one price must vary for the industries in the economy to remain in long-run equilibrium, that is, in what Steedman calls Full Industry Equilibrium (FIE). And he has produced many examples, often without reswitching or even capital-reversing, in which competitive firms facing Constant-Returns-to-Scale technology desire to employ more of an input per unit output when that input's price is higher.

Although he has occasionally taken excursions into consumer theory or the Heckscher-Ohlin-Samuelson (HOS) theory of international trade, Steedman's analysis is not of General Equilibrium. He does not consider utility maximization. Thus, he does not consider the supply of non-produced inputs or the demand for consumer goods. FIE does not imply that the economy as a whole is in equilibrium or that supply and demand match in every industry. It is an open partial analysis.

I read the earliest couple of these papers a while ago. (I reference them in my 2005 Manchester School paper.) But only in the last few years did I become aware that one of Steedman's research agendas is so focused.
  • Opocher, Arrigo and Ian Steedman (2006). "Long-Run Rising Supply Price and the Numeraire", Discussion Papers in Economics, Manchester Metropolitan University, ISSN 1460-4906
  • Opocher, Arrigo and Ian Steedman (2005). "The Industry Supply Curve: Two Different Traditions", Manchester Metropolitan University, ISSN 1460-4906
  • Steedman, Ian (2006a). "Long Run Demand for Labour in the Consumer Good Industry", Metroeconomica, V. 57, N. 2: 158-164
  • Steedman, Ian (2006b). "Differential Depreciation and the 2x2 Model of Distribution, Pricing and Production", Metroeconomica, V. 57, N. 1: 112-119
  • Steedman, Ian (2005). "Long Run Input Use-Input Price Relations and the Cost Function Hessian" (working paper?)
  • Steedman, Ian (2004). "Consumer Substitution Effects Under Full Industry Equilibrium", Metroeconomica, V. 55, N. 1: 41-48.
  • Steedman, Ian (2003). "The Comparative Statics of Industry-Level Produced-Input-Use in HOS Trade Theory" (working paper?)
  • Steedman, Ian (2002). "Process Recurrence and Input Use at the Industry Level: A Coherent Long-Period Analysis", Economic Issues, V. 17, P. 1 (March): 59-66
  • Steedman, Ian (1998). "Produced Input Use Per Unit of Output", Economic Letters, V. 59: 195-199
  • Steedman, Ian (1988). "Sraffian Interdependence and Partial Equilibrium Analysis", Cambridge Journal of Economics, V. 12: 85-95
  • Steedman, Ian (1985). "On Input 'Demand Curves'", Cambridge Journal of Economics, V. 9, N. 2: 165-172

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