Abstract
While the onset of recession may lead some oligopolistic firms to
engage in price-cutting behavior, we argue this is likely to be only a temporary phenomenon. As the recession deepens, firms will find themselves with (unplanned)
excess capacity, which will increase the mutual benefits of collusion and hence the degree of monopoly is likely to rise. To support this proposition, and adopting a largely heterodox framework, we consider some historical evidence and present some recent data for both U.S. and UK manufacturing and UK retail during the current prolonged slump that has been labeled the “Great Recession.” Such behavior has significant implications for economic recovery.
engage in price-cutting behavior, we argue this is likely to be only a temporary phenomenon. As the recession deepens, firms will find themselves with (unplanned)
excess capacity, which will increase the mutual benefits of collusion and hence the degree of monopoly is likely to rise. To support this proposition, and adopting a largely heterodox framework, we consider some historical evidence and present some recent data for both U.S. and UK manufacturing and UK retail during the current prolonged slump that has been labeled the “Great Recession.” Such behavior has significant implications for economic recovery.
Original language | English |
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Pages (from-to) | 135-162 |
Journal | Journal of Post Keynesian Economics |
Volume | 37 |
Issue number | 1 |
Publication status | Published - Oct 2014 |
Keywords
- Degree of monopoly
- price cost margin
- economic downturn
- collusion
- excess capacity
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Rob Branston
- Management - Senior Lecturer (Associate Professor)
- Centre for Governance, Regulation and Industrial Strategy
- Marketing, Business & Society
- Centre for Business, Organisations and Society (CBOS)
- Tobacco Control Research Group (TCRG)
- Centre for 21st Century Public Health
Person: Research & Teaching, Core staff
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Phil Tomlinson
- Management - Professor
- Marketing, Business & Society
- Centre for Governance, Regulation and Industrial Strategy - Co-Director
- Made Smarter Innovation: Centre for People-Led Digitalisation
Person: Research & Teaching