Saturday, January 11, 2020

Towards the Derivation of the Cambridge Equation with Expanded Reproduction and Markup Pricing

I have a new working paper.

Abstract: Does the Cambridge equation, in which the rate of profits in a steady state is equal to the quotient of the rate of growth and the savings rate out of profits, hold in an economy with widespread non-competitive markets? This article presents a multiple-good model of markup pricing in an attempt to answer this question. A balance equation is derived. Given competitive conditions, this model can be used to derive the Cambridge equation. The Cambridge equation also holds in a special case of markup pricing, with one capital good and many consumption goods being produced. No definite conclusions are reached in the general case.

1 comment:

Anonymous said...

Is there a link between your result and Capital as a magnitude that determines endogenously the composition of the means of production?