Re: Keynes and competition

["Kazuhiro Kurose" <kurose@xxxxxxxxxxxxxxxxxxxxxx>]

> So, I'd say that Keynes' system aspires to be a model
> of real world economies, and therefore cannot be based
> on perfect competition, as the term is currently
> understood.  However, it is compatible with pure
> competition or impure competition -- that is, does
> not depend upon the degree of competition -- and
> does not depend on a disequilibrium in goods market.

I surely understand that the principle of effective demand is satisfied,
irrespective of whether the economy is the perfect competition or the
imperfect competition. But I think that the reason why the involuntary
unemployment arises becomes different due to the assumption on competition.
In the perfect competition world, namely, in the state that goods market is
cleared, the reason of involuntary unemployment is, Davidson argued, only
that money is non reproducible asset. And in the imperfect competition,
namely, in the state that goods market is not cleared, the reason of
involuntary unemployment is that individual demand curve is also downward
sloping, irrespective of money's non reproducibility. I think that these
differences are very important from the purely theoretical perspective,
apart from whether these are appropriate interpretation or not.