There is no standard definition of the competitive process as antithetical schools of thoughts offer different dates of the Competitive process. Neoclassical theory defines argument as a static equilibrium condition with no place for the function of entrepreneurship, since in equilibrium there are no changes in the given data of endowment, technology or preference. Austrian dissatisfaction with the assumptions of standard theory emerged in 1940 analysing the nature of rival as dynamic, because of its constant movement through time (Hayek, 1997). Austrian theorist, Mises suggests that competition facilitated by entrepreneurs is central to how the economy works. The post-Keynesian theory, based on the works of Michal Kalecki, Paul Davidson and others argue that the competition process is active dominance, as markets are prone to reinforcing dominance over time. therefore some degree of monopoly is the commonplace state of affairs in most markets and the oligopoly market structure is the norm.
This essay will justify the similarities and subsequently the differences between the Austrian and post-Keynesian views concerning the competitive process, highlighting trey concepts; fundamental uncertainty, entrepreneur activity and equilibrium.
Basic standard theories view the perfect competitive market structure as a benchmark model of the competitive process where firms are set takers. Firms have to produce as efficiently as the real state of technology allows, at the equilibrium point where footing is equal to marginal cost hence they make normal profit in the long run. However Austrian and post-Keynesian theories some(prenominal) agree that perfect competition is not a competitive process because of the existence of fundamental uncertainty the competitive process cannot have an equilibrium point; hence economic agents cannot perfect utility. While the two schools agree essentially on the...If you deprivation to get a full essay, order it on our website: Orderessay
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