In the last 10-15 years a lot of attempts has been devoted to study the classical process of convergence of "market prices" toward "natural prices." The two forces that one has thought could achieve this target were capital mobility, that determines the dynamics of output, and demand-supply forces, that determine the dynamics of prices. In this article a model of classical competition is proposed in which a full-cost pricing mechanism is adopted in the rule of evolution of market prices. An asymptotical stability result of long-run equilibrium is proved for a two-commodity model with and without a final demand.
Bellino, E., Full-cost pricing in the classical competitive process: A model of convergence to long-run equilibrium, <<JOURNAL OF ECONOMICS>>, 1997; 65 (1): 41-54. [doi:10.1007/BF01239058] [http://hdl.handle.net/10807/163686]
Full-cost pricing in the classical competitive process: A model of convergence to long-run equilibrium
Bellino, Enrico
1997
Abstract
In the last 10-15 years a lot of attempts has been devoted to study the classical process of convergence of "market prices" toward "natural prices." The two forces that one has thought could achieve this target were capital mobility, that determines the dynamics of output, and demand-supply forces, that determine the dynamics of prices. In this article a model of classical competition is proposed in which a full-cost pricing mechanism is adopted in the rule of evolution of market prices. An asymptotical stability result of long-run equilibrium is proved for a two-commodity model with and without a final demand.
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