Capital Mobility and Unequal Profit Rates: A Classical Theory of Competition by Boundedly Rational Firms

Marc van Wegberg
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Marc van Wegberg: University of Limburg, P.O. Box 616, 6200 MD Maastricht, The Netherlands

Review of Radical Political Economics, 1990, vol. 22, issue 2-3, 1-16

Abstract: A key concept in the classical economic theory is the long-run equilibrium based on a uniform rate of profit with associated prices of production. This equilibrium is the outcome of an adjustment process: differential profit rates induce capital mobility between markets, which continues until profit rates equalize. Nikaido's (1983) critique initiated a series of papers modeling this process. This paper contributes to the debate by employing an evolutionary-type model with (1) bounded rationality in decision-making, (2) imperfect labor mobility, and (3) structural change in the economy. It finds that the latter two conditions impede a tendency for profit rates to equalize.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:22:y:1990:i:2-3:p:1-16

DOI: 10.1177/048661349002200201

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