MONOPOLY POWER, INCOME DISTRIBUTION AND PRICE DETERMINATION

L. Mainwaring

Kyklos, 1977, vol. 30, issue 4, 674-690

Abstract: A Kaleckian explanation of price determination under conditions of monopoly power is developed in the context of Sraffa's fixed capital system. Income distribution depends on firms’ ability to mark up prices above unit variable costs. Assuming that firms attempt to maximise their rates of growth, the effect of short‐run increases in monopoly power is a fall in real wages accompanied either by increased advertising expenditures or a reduced level of plant utilisation. A possible cause of such changes is variation in the bargaining power of labour unions.

Date: 1977
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