ECON 20 Lecture Notes - Lecture 15: The American Economic Review, Demand Curve, Perfect Competition
19 May 2020
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Clark, toward a concept of workable competition, american economic review, 1940, Clark talks about long run demand curves as being more elastic than commonly represented. Standard model, lr effect shows up by max. profits in sr, then if there are profits, entry. Unrealistic: only makes sense in org. exchange because there are no consequences. The long run demand curve is far from the equilibrium point. Organized exchanges have no idea of what"s going to happen tomorrow. Only difference is that hayek rejects it but. The difference is the uncertainty of what these two will bring to us. One assumes q while the other assumes p. the firm"s nature does change because if we pick q, its competition but picking p would be monopolistic behavior. No bc if that"s the ideal case, every deviation is seen as something worse. Some deviations make it better or worse secret price cutting.
