On 5/8/06, Julio Huato <[EMAIL PROTECTED]> wrote:
Would it be clearer if I said that what passes as increasing/decreasing returns *to scale* is, in fact, increasing/decreasing *to particular inputs* holding the rest fixed?
I knew what you were talking about. The sociology stuff of Colander, etc., isn't exactly an input, just as technology isn't.
... Just note that *that* does not kill constant returns, perfect competition, or general equilibrium. It's instead an argument for peaceful co-existence.
perfect competition and general equilibrium _should_ be killed! Among other things, if we have an optimal firm size, a perfectly competitive market does not have an equilibrium. There may be 10,000 firms of optimal size in a market where the quantity demanded equals the quantity supplied, but there's nothing to say that they are the _same_ 10,000 firms over time. Instead, there can be constant change (a non-equilibrium flux). Or if there are constant returns to scale, the entire market may be dominated by 100 firms, 10,000 firms, 576 firms, etc., again with no assurance that the same firms -- or same structure of firms -- will dominate over time. Again, there is flux. BTW, Gil Skillman, who's much more of a micro-man than I am, should be involved in this discussion. I'm a macro-man, and everyone knows that macro is BS. (as opposed to micro, which is science. ha ha.) -- Jim Devine / "Sanity is a madness put to good use." -- George Santayana.
