Opocher A., Steedman I. Full Industry Equilibrium: A Theory of the Industrial Long Run

Cambridge University Press, 2015. — 234 p. — ISBN: 9781107097797The late 1960s saw the growth of the new long-run theory of the firm, many of the contributions to this literature appearing in the American Economic Review. At about the same time, capital theory flourished, as a sequel to Sraffa’s famous book, Production of Commodities. Each of these theories emphasized that the forces of free competition lead to positions of zero extra-profit and each, in its own way, involved a rejection of over-partial reasoning. At the heart of the new long-run theory of the firm lies the idea that if a zero extra-profit equilibrium is disrupted by, say, an increase in the price of one factor, that price increase must be compensated by an increased product price if such an equilibrium is to be restored. (See, for example, Ferguson and Saving, 1969; Silberberg, 1974; Braulke, 1987.) This need to change more than one price at a time is the very basis of the revised comparative statics. It was also central to Sraffa’s arguments, focused on the economy as a whole, that betwe en any two alternative positions of the economy, corresponding to a different real wage, all relative prices would be different.