Pricing, price stability, and post Keynesian price theory
This dissertation contributes to heterodox microeconomics by building a comprehen- sive and coherent theoretical system for price cyclicality and stability since they are under-theorized issues in both neoclassical and heterodox microeconomics. In par- ticular, it develops an empirically grounded theory of price cyclicality and stability from the Post Keynesian perspective by examining the causal mechanisms for price setting which are supported by empirical evidence. By doing so, it sheds light on the mechanisms through which price stability is secured. The dissertation has four major implications for heterodox microeconomics. First, it demonstrates that there is no such thing as a deterministic relationship between sales and prices predicated on the neoclassical supply and demand framework. The relationship can appear to be positive, negative, or nil at all depending on how the cost base responds to the output change. Second, it demonstrates that it is not the pro t mark-up but the cost base that works as the key driver of price cyclicality, which means that all neoclassical explanations for price cyclicality have no foundation. Third, it refines the heterodox theory of intrinsic price stability by updating Lee's (1998) grounded price theory. Last but not least, it extends the heterodox price stability theory by di erentiating between intrinsic and extrinsic price stability, identifying their roles and implications and incorporating labor hoarding and discipline e ects to the theorization of the ex- trinsic price stability. All these contributions will be of crucial importance for the re nement and development of heterodox microeconomics.
Table of Contents
Introduction -- Denial and acceptance of the administered price thesis -- Extending post Keynesian price theory -- How U.S. industry prices respond to cost and demand factors over the cycle -- Conclusion -- Appendix A. Research method -- Appendix B. Development of new costing technique since 1980 -- Appendix C. Diversification of pricing strategies since 1980