[OPEL:6222] RE: What is the debate is about?

andrew kliman (Andrew_Kliman@CLASSIC.MSN.COM)
Wed, 25 Feb 98 17:58:23 UT

A reply to the PIAF:

From: owner-ope-l@galaxy.csuchico.edu on behalf of Allin Cottrell
Sent: Wednesday, February 25, 1998 10:11 AM
To: ope-l@galaxy.csuchico.edu
Subject: RE: [OPE-L] What is the debate is about?

Allin writes:

"Andrew's counter-example involves the knock-on effects of a change in
technology that took place before Ian's time-window
opened. It would be in the spirit of Ian's original thought experiment to
say, 'OK, give the system enough "time" for the
reverberations of that change to die away, and then consider my argument.'"

Allin is postulating, in effect, that P1(in) = P1(out). Ian's premise was the
opposite and, I think, so was the spirit of his thought experiment.

I read Ian's underlying question as "how can the prices of two different
periods differ if all determinants of prices are the same?" My answer was
that all determinants of prices of his periods 1 and 2 were not the same: the
input prices of a period are determinants of the period's output prices, and
the input prices of period's 1 and 2 differed. But Ian himself can tell us
what he intended.

IF we begin from a set of stationary prices (P1(in) = P1(out)), and if nothing
else changes, then it is obvious that the prices will remain stationary. No
one disputes that.

Andrew Kliman