Heterodox
Many - not all - of my recent numerical examples have a certain abstract pattern: At the start of the time under consideration, one technique is uniquely cost minimizing, for all feasible rates of profits. Coefficients of production decline or some markups over the normal rate of profits vary. A fluke switch point appears. Switch points move along the wage frontier, and interesting phenomena occur. These can be other fluke switch points. Reswitching, the recurrence of techniques, capital-reversing, the reverse substitution of labor, or process recurrence might arise for some time. Eventually, these interesting phenomena disappear, and another technique is uniquely cost minimizing, for all feasible rates of profits. I have not been looking at random technology. The occurrence of a
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Many - not all - of my recent numerical examples have a certain abstract pattern:
- At the start of the time under consideration, one technique is uniquely cost minimizing, for all feasible rates of profits.
- Coefficients of production decline or some markups over the normal rate of profits vary.
- A fluke switch point appears.
- Switch points move along the wage frontier, and interesting phenomena occur. These can be other fluke switch points. Reswitching, the recurrence of techniques, capital-reversing, the reverse substitution of labor, or process recurrence might arise for some time.
- Eventually, these interesting phenomena disappear, and another technique is uniquely cost minimizing, for all feasible rates of profits.
I have not been looking at random technology. The occurrence of a fluke switch point is not surprising in my examples. Neither is some of the phenomena mentioned in (4). I have been deliberately creating examples to highlight some of these possibilities. But I have often found a second or more fluke switch points arising that I did not expect. I have also created examples in which one technique gets replaced with another, but in which reswitching, etc. do not occur.
My program remains unfinished. In these posts and papers, I have suggested the possibilities of some proofs and additional fluke switch points. I have yet to even begin considering how the changes in the wage frontier I have been investigating might manifest themselves in the movement of market prices. I could do more with markups varying among industry. I have yet to provide examples with land and fixed capital, where the wage frontier is not the appropriate tool for analyzing the choice of technique.