Re: GT and microfoundations

[Sven Robert Larson <larson@xxxxxx>]

I believe that the microfoundations are of a different kind, independent
of the market "type". It's a matter of understanding how prices are
formed and how agents interact to create confidence and lasting economic
relations (in recognition of, originally, Keynes's Treatise on
Probability). Whether or not markets are perfectly competitive,
monopolistically competitive, oligopolistic, etc. is a different matter
- important and interesting, but different. It does not distinguish
Keynesian microeconomics.

/srl

"John M. Legge" wrote:
>
> I have just completed reading Keppler's Monopolistic Competition Theory in
> which the author traces the development of monopolistic competition theory
> from Sraffa's 1926 epitaph for perfect competition to Stigler's and
> Friedman's unchallenged rejection of monopolistic competition on essentially
> ideological grounds in the 1950s.
>
> Keppler makes the point that many of the Cambridge people behind the
> original developmnet of monopolistic competition theory were also associates
> of Keynes, and refocussed their efforts on macroeconomics after the
> pubklication of the GT, leaving Chamberlin to battle the University of
> Chicago on his own.
>
> On page 189 Keppler writes:
> ...although Keynesianism is still very much alive (albeit on the defense),
> it will continue to lack microfoundations as long as monopolistic
> compeittion is not taken into account.  Some research in this field is still
> active...
>
> Is this a fair statement of the position?
>
> JML