[OPE-L:3494] Re: accumulation: disequilibrium dynamics

Steve Keen (s.keen@uws.edu.au)
Sun, 20 Oct 1996 20:57:55 -0700 (PDT)

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Well, the "homogeneous products" issue may be just the same as our earlier
discussions re finance v tech change--which do you introduce first. In which
case, I'm happy enough to leave it to personal preference. But it may also
be that some of the things we "learn" with the assumption should be
contradicted when we drop it. The problem is, however, that economists of
all flavours often appear to want to hold on to one result when they more
from one domain to another.

On the computer modelling issue, yes, it is the cutting edge. My statement
was largely an acknowledgement that I'm currently working with "outdated"
methods--though there are still insights that math can give that are a lot
harder to derive from observing computer models, so there is a symbiotic
relationship rather than a supercession.

>Steve K wrote in [OPE-L:3490]:
>> The mention of "homogeneous products" below
>> is one. If you work at the individual firm level, then IMO you're beholden
>> to work with heterogeneous products as well, and define industries by breaks
>> in relative elasticities of demand.
>The assumption of "homogeneous products" was made to avoid discussing *at
>this stage* the process of product differentiation common in oligopolistic
>markets where advertising and marketing can serve as a *substitute* for
>technical change and price competition by firms (under certain
>conditions). The justification for this simplifying assumption would be as
>follows: before we consider the form that rivalry takes when there are
>oligopolitic markets, we should first consider the case where there are
>more competitive markets.
>> I think these considerations take us out of the realm of mathematical
>> modelling and into computer (evolutionary) modelling.
>That may be the case, but isn't that where the "cutting-edge" is currently
>re models of technological change?
>In Solidarity,
Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au (046) 20-3254 Fax (046) 26-6683