Re: Keynes and competition

[PHILIPPE BURGER <mwburgph@xxxxxxxxxx>]

Yes, in theory, a flat curve means that you can expect to sell what ever you
want to sell.  However, there is one precondition, you can expect to sell
whatever you produce as long as your supply remains an insignifcant
proportion of the total supply.  Let us conduct a little thought experiment
and suppose you want to sell more than that quantity where MR=MC, ie. for
some or another reason you are irrational in terms of the standard model in
that you dont want to maximise your profit.  The more you will sell the
larger will your supply be as a proportion of total supply.  Somewhere along
the line your supply is not insignificant anymore, from that point onwards
your demand curve becomes negatively sloped and it starts to resemble the
industry (market demand) curve.  The basic idea is that when you say the
demand curve is flat, while the market curve is not, it merely means that
you do not as a producer expect to supply in more than the buyers at the
margin demand. Saying that you can sell everything you produce at the going market
price when the market demand is negative by implication means that your
individual supply is not realy going to shift the supply curve of the
industry in any significant way.

Lastly, if the market clears and is in equilibrium a company will experience no demand

constraint before the point where MR=MC.  If the market demand is constrained it then will

affect the number of firms rather than the output by each firm.

Philippe