Theoretical foundations Industry Economics 产业经济学理论基础22.pdfVIP

IEA Revision Theoretical Foundations Theoretical Foundations 1. static and dynamic views of competition 1. neoclassical theory of the firm 1. focus: long-run equilibrium 2. Marshall (1890) and Sraffa (1926): theory of monopoly — a firm earns an abnormal (monopoly) profit constitute evidence that a) AC to fall as the scale of production increases (beneficial) ; b) exploits its market power by restricting output and raising price (damaging). 3. if there is recognition of change at all, it is change in the sense of a new stationary equilibrium of endogenous variables in response to an altered set of exogenous variables; but comparative statics is still and end-state conception of economics. (Blaug, 2001) 2. dynamic approaches to competition 1. assumptions: knowledge or information is always imperfect. 2. Schumpeter (1928, 1942): competition is driven by innovation (which entrepreneur plays a key role) — successful innovation is rewarded with (temporary not capable of sustaining a stable long-run equilibrium) monopoly status — catching-up period: a) imitators are able to move into the market, eroding the original innovators’ monopoly status and profits; b) another innovator may come along with an even better product or production process. 3. Austrian school 1. Kirzner (1973): market as comprising a configuration of decisions made by consumers, entrepreneurs and resource owners — entrepreneurs notice missed opportunities (information) for mutually advantageous trade (= disequilibrium) — entrepreneurial function adds to the flow of information and lubricate the process of adjustment towards a new allocation