Imperfect Competition, Learning and Fluctuations



The strategic roles of imperfect competition and monopolistic competition have undergone considerable changes since their inception in the thirties, when (Robinson 1933) and (Chamberlin 1933) first and independently formalized the two similar concepts. For instance, their field of application has transcended microeconomics to occupy an important place in macroeconomics, where they are supposed to be superior with respect to perfect competition. This happened some time ago (see Kalecki 1971; Minsky 1954, 2004), and it has been recently reformulated in the so called “new” Keynesian literature (see Blanchard and Kiyotaki 1987).

This potential superiority, however, has been strongly limited by the presence of two hypotheses, namely the symmetry hypothesis and the rational expectation assumption, which are instead untenable in a world of imperfect knowledge economics (IKE, according to the definition of Frydman and Goldberg 2007). Specifically, in such an environment, heterogeneity among agents rules out the symmetry hypothesis. Furthermore, the presence of imperfect knowledge suggests that the interdependence processes characterizing heterogeneous agents must be dealt with in a simplified macro approach. Finally, agents have to learn the dynamic process from the data.


Income Distribution Aggregate Demand Recursive Little Square Regime Switching Imperfect Competition 
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© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.Dipartimento di EconomiaUniversità di BergamoBergamoItaly

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