INCOME DISTRIBUTION AND DUAL STABILITY IN A SYSTEM OF COMPETITIVE MONOPOLIES

Abstract

In this paper, a set of assumptions concerning the behaviour of "competitive monopolies" is formulated in terms of a Sraffa-Leontief dynamic model. Each firm is monopolistic in the sense that it has price fixing power with a fixed mark-up rate and that it can pass on the effect of money wage increase in the form of higher price. The system is competitive in the sense that each firm competes for the maintainance of and, whenever possible, for the expansion of the market share. However necessary capacities are not known exactly in advance as was assumed in neoclassical studies, but have to be forecasted taking into past performances. So the short-run equilibrium is possible with excess capacities. In this framework, the distributional effects of money wage rise and dual stability of prices and quantities are studied.