On Imperfect Competition and Macroeconomic Analysis

  • Malcolm C. Sawyer


Since the publication of the General Theory there has been the lurking idea that substantial unemployment lasting for a number of years is associated with the existence of imperfect competition. In the late 1930s ideas such as ‘administered prices’ (Means, 1935), full-cost pricing (Hall and Hitch, 1939) and the ‘kinked demand’ curve theory (Sweezy, 1939) were concerned in different ways with the notion that prices were sticky, and that this stickiness of prices arose in the context of imperfection competition. To some degree these works interacted with the perception that Keynesian economics involved the assumption of sticky prices. During the 1950s the use of IS—LM analysis based on fixed prices could be justified by reference to the idea that under imperfect competition prices tended to be sticky (in some rather undefined sense). Some aspects of the Clower-inspired reappraisal of Keynesian economics also drew on the view that the source of sticky prices was the pricing policies under imperfect competition (see Malinvaud, 1977). Hicks’s distinction between fixprice and flexiprice market has some correspondence with the dichotomy between imperfect competition and perfect competition when he postulated that ‘[t]here are markets where prices are set by producers; and for those markets, which include a large part of the markets for industrial products, the fixprice assumption makes good sense. But there are other markets, ‘flexprice’ or speculative


Real Wage Collective Bargaining Demand Curve Aggregate Demand Excess Demand 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. ARROW, K. (1959) ‘Towards a Theory of Price Adjustment’, in M. Abramovitsz (ed.) The Allocation of Economic Resources, California: Stanford University Press.Google Scholar
  2. BROTHWELL, J.F. (1975) ‘A Simple Keynesian Response to Leijonhufvud’, Bulletin of Economic Research 27 pp. 3–21.CrossRefGoogle Scholar
  3. CHICK, V. (1983) Macroeconomics After Keynes, Deddington: Philip Allan.Google Scholar
  4. CHICK, V. (1986) ‘The Evolution of the Banking System and the Theory of Saving, Investment and Interest’, Economies et Societies, Cahiers de l’ISMEA Serie Monnaie et Production, no. 3.Google Scholar
  5. CLOWER, R. (1965), ‘The Keynesian Counter-Revolution’, in F. Hahn and F. Brechling (eds) The Theory of Interest Rates London: Macmillan.Google Scholar
  6. COWLING, K. and WATERSON, M. (1976) ‘Price—Cost Margin and Market Structure’, Economica 43, pp. 267–74.CrossRefGoogle Scholar
  7. CROSLAND, C.A.R. (1956) The Future of Socialism, London: Jonathan Cape.Google Scholar
  8. DRAZEN, A. (1980) ‘Recent Developments in Macroeconomics Disequilibrium Theory’, Econometrica 48, pp. 283–306.CrossRefGoogle Scholar
  9. DUNLOP, J. (1938) ‘The Movement of Real and Money Wage Rates’, Economic Journal, 48, pp. 413–34.CrossRefGoogle Scholar
  10. GODLEY, W. and NORDHAUS, W. (1972) ‘Pricing in the Trade Cycle’, Economic Journal 82, pp. 853–82.CrossRefGoogle Scholar
  11. GROSSMAN, H. (1972) ‘Was Keynes a Keynesian?’ Journal of Economic Literature 10, pp. 26–30.Google Scholar
  12. HAHN F. (1978) ‘On Non-Walrasian Equilibria’, Review of Economic Studies 45, pp. 1–17.CrossRefGoogle Scholar
  13. HALL, R. and HITCH, C. (1939) ‘Price Theory and Business Behaviour’, Oxford Economic Papers no. 2, pp. 12–33.Google Scholar
  14. HICKS, J. (1974) The Crisis in Keynesian Economics Oxford: Blackwell.Google Scholar
  15. HODGSON, G. (1988) Economics and Institutions, Oxford: Polity Press.Google Scholar
  16. KALDOR, N. (1955) ‘Alternative Theories of Distribution’, Review of Economic Studies 23, pp. 83–100.CrossRefGoogle Scholar
  17. KALDOR, N. (1978) Further Essays on Economic Theory, London: Duckworth.Google Scholar
  18. KALECKI, M. (1939) Essays in the Theory of Economic Fluctuations, London: Allen and Unwin.Google Scholar
  19. KALECKI, M. (1944) ‘Professor Pigou on “The Classical Stationary State”: A Comment’, Economic Journal, 54, pp. 131–2.CrossRefGoogle Scholar
  20. KALECKI, M. (1971) Selected Essays on the Dymmics of the Capitatist Economy, Cambridge University Press.Google Scholar
  21. KEYNES, J.M. (1936) The General Theory of Employment, Interest and Money, London: (Macmillan).Google Scholar
  22. KEYNES, J.M. (1939) ‘Relative Movements of Real Wages and Output’, Economic Journal 49, pp. 34–51.CrossRefGoogle Scholar
  23. KEYNES, J.M. (1973) The General Theory and After: Part II Defence and Development, Collected Works, vol. 14, London: Macmilan.Google Scholar
  24. LAYARD, R. and NICKELL, S. (1985) ‘The Causes of British Unemployment’, National Institute Economic Review, no. 110, pp. 62–85.Google Scholar
  25. LAYARD, R. and NICKELL, S. (1986) ‘Unemployment in Britain’, Economica 53 (supplement), pp. S121–70.CrossRefGoogle Scholar
  26. MCDONALD, I. (1985) ‘Market Power and Unemployment’, International Journal of Industrial Organisation 3, pp. 21–35.CrossRefGoogle Scholar
  27. MALINVAUD, E. (1977) The Theory of Unemployment Reconsidered Oxford: Blackwell.Google Scholar
  28. MEANS, G.C. (1935) ‘Industrial Pricing and their Relative Flexibility’ (US Senate Document 13, 74th Congress, 1st Session, Washington).Google Scholar
  29. MODIGLIANI, F. (1944) ‘Liquidity Preference and the Theory of Money’, Econometrica 12, pp. 45–88.CrossRefGoogle Scholar
  30. NG, Y.K. (1986) Meso-economics, Brighton: Wheatsheaf.Google Scholar
  31. OKUN, A. (1981) Prices and Quantities: A Macroeconomic Analysis, Oxford: Blackwell.Google Scholar
  32. ROBINSON, J. (1933) The Economics of Imperfect Competition, London: Macmillan.Google Scholar
  33. ROWTHORN, R. (1977) ‘Conflict, Inflation and Money’, Cambridge Journal of Economicsa I , pp. 215–40.Google Scholar
  34. SAWYER, M. (1982a) Macro-economic in Question, Brighton: Wheatsheaf.Google Scholar
  35. SAWYER, M. (1982b) ‘Collective Bargaining, Oligopoly and Macroeconomics’, Oxford Economic Papers 34, pp. 428–48.Google Scholar
  36. SAWYER, M. (1985) Economics of Michal Kalecki, London: Macmillan.Google Scholar
  37. SAWYER, M. (1986) ‘Conflict and Aggregate Demand in Post Keynesian Economics: The Problem of Over-Determinacy’ (mimeo).Google Scholar
  38. SWEEZY, P. (1939) ‘Conditions of Demand under Oligopoly’, Journal of Political Economy 47, pp. 568–73.CrossRefGoogle Scholar
  39. SYLOS-LABINI, P. (1984) ‘On the Concept of the Optimum Rate of Profit’ in The Forces of Economic Growth and Decline, Cambridge Mass.: MIT Press.Google Scholar
  40. TARSHIS, L. (1939) ‘Changes in Money and Real Wages’, Economic Journal 49, pp. 150–154.CrossRefGoogle Scholar
  41. THIRLWALL, A.P. (1983) ‘Comment’ in Worswick and Trevithick (1983).Google Scholar
  42. WEITZMAN, M. (1982) ‘Increasing Returns and the Foundations of Unemployment Theory’, Econornic Journal 92, pp. 784–804.Google Scholar
  43. WORSWICK, D. and TREVITHICK, J. (eds) (1983) Keynes and the Modern World, Cambridge University Press.Google Scholar

Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 1992

Authors and Affiliations

  • Malcolm C. Sawyer

There are no affiliations available

Personalised recommendations