Re: GT and microfoundations

["David Dequech" <dequech@xxxxxxxxxxxxxx>]

Dear Sven and others,

When I referred to the form of competititon, it was because of the ongoing
discussion in the list. At least to some of the people involved, the form of
competition matters because of the implications it has in terms of price
flexibility or ridigity. When Paul, for example, says he prefers not to
assume monopolistic or oligopolist competition, I believe it's because of
the price ridigity or stickness associated with these forms of competition
and because he want to show that unemployment may occur even without such
rigidity or stickness.  Sven emphasizes price stickness and says it's
superfluous to discuss the form of competition, but doesn't price stickness
imply something about the form of competition (market structure, etc)
underlying the pricing policy of firms?

Besides, I think that when, because of the pricing implications of market
structure, we bring considerations of market structure to a discussion of
employment, stability, etc., we have to acknowledge that market structure
matters for many reasons other than its pricing implications. I'll say a bit
more on this later, depending on how the discussion goes.

I agree with the idea that uncertainty leads people to try to get some of
control of prices, etc. In fact, this is one the reasons I mentioned in my
"Another look etc" paper why pure competition could not survive for long. By
the way, please remember that I also said that the possibility of pure
competition is a different issue from the possibility of unemployment under
pure competition.

Cheers,
David