A Reswitching Example in a Model of Oligopoly

Abstract

This paper illustrates, through a numerical example of reswitching under oligopoly, the existence of implications from the Cambridge Capital Controversy for the theory of industrial organization. Oligopoly is modeled by given and persistent ratios in rates of profits among industries, as expressed in a system of equations for prices of production. The numerical example illustrates that this model of oligopoly is a pertubation of free competition. Some comparisons and contrasts are drawn to a model of free competition.

Keywords: Cambridge Capital Controversy, Reswitching, Oligopoly

JEL Classification: B24, D24, L4, D43