Long-period method and analysis of technological change: is there any inconsistency?∗

Abstract

A recurrent theme in economic analysis is the criticism of the traditional method based on the investigation of ‘normal’ or long-period positions (LPP) considered as centres of gravitation for the actual positions of the economy. The paper discusses this criticism with particular reference to the consistency of the long-period method (LPM) with the analysis of technological change and competition. It is argued that the role of the tendency towards the LPP was seen by traditional economists as part of the process of selection from among competing technologies. This process was regarded as leading to the emergence of dominant techniques determining normal prices and profitability. The concept of competition covered by the notion of gravitation towards the LPP is not, therefore, restricted to the diffusion of given technologies, but includes the introduction of new techniques. In addition, traditional economists did not look at the adjustment towards the LPP as a fully accomplished process, but only as tende...