Neoclassical Theory Research Articles

THE USE OF COBB-DOUGLAS PRODUCTION FUNCTION IN MODELING PRODUCTION PROCESSES

Several alternative economic approaches to the study of organization are discussed in the literature: the neoclassical theory, the theory of transaction costs (the theory of specific assets), the theory of incomplete contracts (the theory of property rights), and the Agency theory (the theory of incentives). Recently, there have been approaches at the intersection of Economics and management: resource theory, knowledge theory, strategic theory, entrepreneurial theory; in the framework of sociology: network theory, the theory of resource dependence, the theory of institutional isomorphism, the theory of situational choice, the theory of strategic choice. The article deals with the basic model of neoclassical theory. The advantage of the neoclassical theory is that it emphasizes the role of technology in General and economies of scale in particular as factors that influence the size of production, turnover of organizations. Within the framework of the considered approach, a certain macrostructure is determined that carries out the costs of economic resources: fixed assets, the number of employees that affect the turnover of organizations. The task of rational economic management, which meets the Udmurt Republic, is to determine the forecast of turnover of organizations with the given resources and to calculate the necessary for its value of fixed assets, the number of employees.

A Methodological Approach to Identifying the Optimal Market Behavior Strategy Based on Fuzzy Game Modeling

The presented study models market behavior strategies for firms in real (“impure”) markets.Aim. The presented study aims to develop tools for optimizing (according to the criterion of profit maximization) the market behavior of firms based on the achievements of modern mathematics.Tasks. The authors describe theoretical approaches to modeling the behavior of firms; define the problem of modeling the market behavior of firms in the language of game theory; modify the game model by implementing elements of the theory of fuzzy logic and fuzzy sets; develop and test a methodological approach to identifying the optimal behavior of firms based on fuzzy game modeling.Methods. This study uses general methods of economic and mathematical modeling, provisions of neoclassical and institutional firm theory, tools of game theory and the theory of fuzzy logic and fuzzy sets.Results. The optimal market behavior strategy for firms selling the same product is determined. The implementation of this strategy focuses on maximizing profits with allowance for the imperfections of real markets. A rigorous solution to this problem is proposed, based on the provisions of game theory, theory of fuzzy sets and fuzzy logic. The developed methodological approach to identifying the optimal market behavior strategy based on fuzzy game modeling is illustrated by a meaningful example.Conclusions. The developed and tested methodological approach to identifying the optimal market behavior strategy based on fuzzy game modeling described in the article allows firms to search for optimal strategies with allowance for the imperfections of real markets. It can be used for theoretical modeling of the behavior of firms in an “impure” market, including in a mixed economy, where the government has a certain degree of planning and administrative influence on economic processes. The proposed approach can be recommended for use by the management of firms in the development and implementation of competitive strategies.

Technological Systems and Economy: a Heterodox Approach and Institutional Framework

Technologies determine the level of innovative development and economic growth. The article studies a methodological platform for a new unit of analysis in economic science such technological system. This phenomenon involves the research program, the study of the specifics and features this mesolevel pattern. The methodological basis of the research includes Neoclassical and Neoinstitutional Economic theories, Strategic Management and Complexity Economic. The research program we apply a Heterodox approach as a set of the Contract theory, Evolutionary theory, Complexity Economic and Platform ecosystems. The authors define a technological system as an economic meso-level pattern that coordinate actions and knowledge about system and component technologies and functioning through the quasi-self-enforcing contracts based on standards and independent of property rights. Any meso-level pattern that has technological and institutional identity is a technological system. The types of technological systems in the economy are highlighted on the basis of the consolidated classification “blurring of the bundle of property rights to technology – the degree of technology decentralization”. The results create the basis for further research of identifying boundaries and analyzing the competitiveness of technological systems, as well as assessing public administration strategies in this area.

Comment mesurer la contribution de l’énergie à la croissance économique ?

La théorie néoclassique considère que l’énergie joue un rôle mineur dans le processus de croissance et pourrait donc aisément être substituée. Ce traitement de l’énergie a été vivement critiqué par le courant de l’économie écologique. Certains de ses auteurs ont tenté d’intégrer les apports de la thermodynamique aux fonctions de production agrégée mais leur démarche n’est pas totalement satisfaisante : elle continue de confondre production physique et valeur économique. Ainsi, nous suggérons de mesurer la contribution de l’énergie au processus de croissance à partir de son rôle dans la formation des coûts. Classification JEL : A12, Q40, O13

Educational Migration in the Semantic Space of Political Science: a Review of Theoretical Approaches

Among modern studies on the phenomenon of migration, of particular interest is the work studying and analyzing educational migration as one of the most popular and promising areas of migration. Despite numerous work devoted to the issue of educational migration, latter still remains the least studied migration category. In order to identify current trends and patterns of international educational migration and to trace development of theoretical constructions explaining migration process, author has conducted an analysis of more than 60 scientific publications (both theoretical and empirical studies) of foreign authors on the issues of consideration. Analysis of publications was carried out in context of a critical review of scientific theories and research concepts on educational migration. As the main theories, neoclassical theories of migration of macro (the concept of Push-Pull factors) and micro (the theory of human capital) level, transnational theory and theory of global knowledge were considered. As a result, author notes that educational migration studies are mostly aimed at studying economic aspects of migration, determinants and causes of migration, issue of highly qualified migration, processes of integration and adaptation of foreign students, new directions of student migration, transnational spaces and social migrant networks etc. Publications on the values and axiological aspects of educational migration are much less common. To sum up, based on results of the study, article reveals that vectors of educational migration studies are shaped by transformation occurring in the world and in the global educational environment that directly affects the nature of student migration flows.

Η Ανατροπή της Νεοκλασικής Θεωρίας μέσω των Ιδίων της Μέσων (The Disproof of Neoclassical Theory by means of Its Own Means)

Greek abstract: Η μέχρι τώρα έρeυνά μου που αποκαλύπτeι θeμeλιώδη λάθη της συμβατικής (νeοκλασικής) οικονομικής θeωρίας, βασίζeται κυρίως στη (λανθασμένη) αντίληψη της θeωρίας αυτής για το price taking και την οριζόντια καμπύλης ζήτησης της eπιχeίρησης, χρησιμοποιώντας αντ' αυτής την σωστή ατομική καμπύλη ζήτησης της eπιχeίρησης, που eίναι κeκλιμένη και ίση μe την συνολική ζήτηση διαιρeμένη δια του αριθμού των eπιχeιρήσeων για κάθe τιμή. Παρά τη μeγάλη αναγνωσιμότητα και το ζωηρό ακαδημαϊκό eνδιαφέρον που έχουν προκαλέσeι τα σχeτικά άρθρα μου, αντιλαμβάνομαι κάποιeς δυσκολίeς σχeτικά μe την αποδοχή της αναθeωρημένης θeωρίας και ίσως ακόμη και την κατανόησή της, λόγω φυσιολογικού eθισμού και προσκόλλησης στην παραδοσιακή θeωρία και τη μeθοδολογία της. Αυτό το άρθρο, ωστόσο, καταδeικνύeι τα λάθη αυτά της συμβατικής θeωρίας χρησιμοποιώντας τη μeθοδολογία της ίδιας της συμβατικής θeωρίας, χωρίς να eμπλέκeται στο αμφιλeγόμeνο ζήτημα της οριζόντιας ή κeκλιμένης καμπύλης ζήτησης της eπιχeίρησης. English abstract: My research so far, which reveals fundamental mistakes of the conventional (neoclassical) economic theory, is based mainly on the (wrong) perception of this theory for the price taking and the horizontal demand curve for the firm, using instead the correct individual demand curve for the firm, which is sloping and equal to the total demand divided by the number of firms for each price. Despite the great readability and vivid academic interest that my relevant papers have caused, I feel some difficulties regarding the acceptance of the revised theory and perhaps even its understanding, due to physiological addiction and adherence to traditional theory and methodology. This article, however, demonstrates these mistakes of conventional theory using the methodology of the conventional theory itself, without getting involved in the controversial issue of the horizontal or sloping demand curve for the firm.

The Disproof of Neoclassical Theory by Means of Its Own Means

My research so far, which reveals fundamental mistakes of the conventional (neoclassical) economic theory, is based mainly on the (wrong) perception of this theory for the price taking and the horizontal demand curve for the firm, using instead the correct individual demand curve for the firm, which is sloping and equal to the total demand divided by the number of firms for each price. Despite the great readability and vivid academic interest that my relevant papers have caused, I feel some difficulties regarding the acceptance of the revised theory and perhaps even its understanding, due to physiological addiction and adherence to traditional theory and methodology. This article, however, demonstrates these mistakes of conventional theory by using the methodology of the conventional theory itself, without getting involved in the controversial issue of the horizontal or sloping demand curve for the firm.

Economic Analysis of Tax Law from a Sustainable Perspective

Since sustainable taxation requires certain tax designs, the question arises if tax rules are adequate from a sustainability perspective. Answering this question presupposes a framework of economic analysis of law. The mainstream approach of economic analysis of law deduces social order rules from the general value of neoclassical efficiency. Yet, efficiency is not an adequate social order value for sustainable tax law, and neoclassical theory is not an adequate underlying theory. Thus, the present Article outlines a framework that discusses how to design sustainable tax rules. It emphasizes that this framework needs methodological rules, empirically confirmed theories like the political-cultural market approach, and the reference to ethical concepts of relevant social values (in contrast to dogmatizing efficiency). This Article argues that Sustainable Development Goals (SDGs) in general are adequate social order values for an economic analysis of tax law. On this basis, the Article outlines how to develop a sustainable tax law. It shows that a decision-neutral tax law is neither realizable nor reasonable. Furthermore, it argues that the substantiation of achieving more equality (SDG 10), e.g., the interpretation of ability to pay, the discussion of companies’ fair shareof tax, or the discussion of whether a one-book system is adequate requires detailed theoretical and ethical analysis. The same holds for answering the question whether environmental taxes are an adequate means to motivating actors to behave in an eco-friendly way (SDGs 7, 11, 12). Even this Article’s short analysis shows that tax rules that are in line with sustainability will differ considerably from tax rules that comply with the mainstream approach of economic analysis of law.

Innovation in the solid waste management industry: Integrating neoclassical and complexity theory perspectives

Often considered a traditional labour intensive activity, in recent years, the solid waste management (SWM) industry has been largely interested in innovation. Nonetheless, the analysis of innovations in the SW industry is frequently confined to process innovation in the disposal segment, neglecting other kinds of innovation – such as product innovation and organizational innovation – in other segments. While several economic theoretical frameworks have been developed for interpreting eco-innovation in general, a specific analysis of innovation in each segment of SWM is still missing, despite the specificities of this sector. To fill this gap, this paper shows how complexity theory can be profitably used to integrate the more traditional neoclassical approach, offering a comprehensive theoretical framework to analyse innovation in the SWM industry from both a market and firm perspective (the neoclassical approach) and from a social perspective (the complexity theory framework). Four main typologies of the SW market system, exhibiting different kinds of innovation, are outlined: (i) a “traditional” landfill-oriented system; (ii) a modern “waste-to-energy” incinerator-oriented system; (iii) a “light recycling” system with integrated solutions and a selection performance that is lower than 50%; and (iv) a “hard recycling” system.

Pakistan’s Balance-of-Payments Crisis and Some Policy Options

Neoclassical price theory, and its extension to IMF country advice, argues that balance-of-payments crises such as Pakistan’s are better resolved by depreciating the exchange rate, making exports cheaper and imports dearer. We argue that a partial equilibrium analysis of just the tradeable goods market on the current account side ignores the capital market on the capital account side, where an increase in outflows allows no equilibrium value for the exchange rate, through a phenomenon dubbed ‘depreciationary expectations’, akin to inflationary expectations. Thisphenomenon will not allow the exchange rate to settle at an equilibrium level, leading to a vicious downward cycle. In such a case,capital controls may well be needed to counter the downward cycle, allowing a return to growth.

Attempt to Monopolisation and Digital Markets: Enforcement Gap

Rapid technological development, particularly in the Information and Communications Technology (ICT) sector, has led to a significant change in the industrial structure as well. Regulatory bodies world over are struggling to adjust to these changing scenarios. There is a widespread discussion regarding the need to regulate technology-driven markets such as e-commerce, telecommunication, etc. The practices used by some business giants are going against the neoclassical economic theory that profit maximisation is the goal of every firm. Firms are opting growth over profit. A large number of investigations were opened in India against business giants. Some of them were able to find contraventions of the Competition Act, 2002 (the Act). However, a large number of investigations were closed due to the lack of cognizance of collective dominance in law or inability to prove dominance in the traditional economic sense. It can be seen from the current jurisprudence of the Competition Commission of India (CCI) that there are constraints in handling competition issues in technology-driven industries mainly on account of the extant legal framework which does not recognise the need of assessing an appreciable adverse effect on competition where the dominance of the firm is not apparent. Although, the Act takes into account attempt to cartelisation as a contravention of the Act, it does not envisage an attempt to monopolise as a contravention of the Act. The past and current jurisprudence of the CCI indicates that CCI’s view is also undergoing radical change. This paper discusses the concept of “attempt to monopolise” as given in the Sherman Act and its applicability in the Indian context. The paper reviews the American antitrust literature existing on this subject and analyses the key factors which constitute antitrust violations under the clause “attempt to monopolise”. While the majority view emphasises on proving dangerous probability of success while determining an attempt to monopolise, as per the minority view, “attempt” connotes conduct and not a state of being. Unlawful intent can be inferred from the conduct as a proof of an “attempt”. The law does not require completion of a crime, it requires conduct. Thus, an attempt to monopolise is a conduct offence. This paper argues that borrowing the attempt to monopolise concept from the Sherman Act, 1890 will be helpful for the CCI in handling antitrust cases in technology-driven industries such as e-commerce, telecommunications, transport, etc.
 It will go a long way in achieving competitive markets, increased consumer choice and welfare in the long-run.

The End of Liberal Engagement with China and the New US–Taiwan Focus

Using neoclassical realist theory, this paper focuses on how the liberal logic underpinning the US engagement policy with the People's Republic of China (PRC) – to promote the PRC's greater marketization, internationalization, political opening, and even democratization – has shaped Washington's One‐China/strategic ambiguity policy since 1972. This approach is used to deal carefully with the Taiwan Strait impasse. However, as strategic competitions intensify between the United States and PRC, the Donald Trump administration is strengthening Washington–Taipei ties, in line with conservative nationalism, to counter a more assertive and authoritarian China. Declaring the failure of past engagement upheld by presidents following Nixon, the Trump government is less cautious about upsetting Beijing through the United States' more explicit backing of the island democracy. The United States’ bolstering of Taiwan's status, though short of recognizing its sovereignty, has received strong bipartisan support in Washington and is unlikely to be changed even if Joe Biden, the Democratic nominee, is elected president in November 2020.

Türkiye'nin Suriye Kaynaklı Kitlesel Göçe Yanıtı: Neoklasik Realist Bir Analiz

Migration studies have seldom dealt with the foreign policy dimensions of refugee migration. Additionally, international relations (IR) theories have barely addressed migration policy. The present study seeks to address this gap by analysing Turkey’s response to Syrian mass migration through the lens of neoclassical realist theory. Its purpose is to ascertain to what extent IR theories, particularly neoclassical realism, help us to understand Turkey’s policies and politics addressing Syrian mass migration and changes over time. It questions the pertinence of Turkey’s relative power and its foreign policy objectives in shaping responses to Syrian mass migration. The research also sheds much-needed light not only on dynamism in power-policy relations but also interaction between the international system and internal dynamics in designing migration policies. It aims to stimulate dialogue between IR theories and migration studies, with a particular focus on the foreign policy dimension of state responses to mass refugee migration.

Economic Development and International and Interregional Tourism

Summary Subject and purpose of work: Tourism was the fastest growing industry until the outbreak of Covid-2019. Nevertheless, there are a few studies on how the industry interacts with the rest of economies within a comprehensive analytical framework. The main concern of this study is how international and interregional tourism interacts with national economic development and economic structural change. Tourism and economic growth are investigated in a multi-regional small open economy which is perfectly competitive. Materials and methods: National economy consists of multiple regions and each region has three sectors: industry, service, and housing. Production side is the same as in the neoclassical growth theory. Households move freely between regions, equalizing utility level between regions by selecting housing, goods, tourism, and saving. A region’s amenity is endogenously related to the region’s population. Results: We explicitly solve the dynamics of the multi-regional economy. The system has a unique stable equilibrium point. Conclusions: We simulate the motion of the model and examine the effects of changes in the rate of interest, foreigners’ preference for visiting a region, a region ‘s total productivity of the service sector, domestic consumers’ preference for visiting a region, as well as the propensity to save, the propensity to consume regional services and housing.

Joan Robinson Was the First Bastard Keynesian: There Is No ‘Perhaps’

Joan Robinson Was the First Bastard Keynesian: There Is No ‘Perhaps’

Un-homing with words: economic discourse and displacement as alienation

This paper is an investigation into the psychological aspects of displacement, where displacement is understood as a form of un-homing that severs the connection between people and place. Extending the human-geographical discussion begun by Mark Davidson and Rowland Atkinson on the possibility of being displaced while staying put, I argue that words and narratives – here exemplified by the Swedish (neo-classical) economic discourse on market rents – can displace people, and that this particular kind of un-homing is best understood as alienation. A theoretical underpinning is psychoanalyst Paul Verhaeghe’s work on identity and language and on the effects of neoliberal political economy on our psychological well-being. I analyze texts by and interviews with economists arguing for the abolishment of the ‘rent regulation system’ and find that their use of the terms ‘insiders’ and ‘outsiders’ frames (current) tenants as undeserving and in the way. Economists encourage displacement (of people who lack the means to pay market rents), they gentrify with their words. By being told they are a ‘welfare loss’, tenants with affordable housing in attractive parts of the city are pushed to become critical on-lookers onto themselves, thereby dis-placed from the spontaneous act of dwelling and alienated from their original insideness. A larger conclusion is that the famous economist Milton Friedman was right: neo-classical economic theory, and homo neoliberalismus, in particular, does not respect geography. This disrespect, I explain, should be interpreted as a philosophical negligence towards human situatedness in place, and as an ethical carelessness towards people’s need for home.

Revalorizando el concepto de crisis de Raúl Prebisch

This article offers a review and appraisal of the concept of crisis in the context of the remarkable trajectory and works of argentine economist Raul Prebisch. It argues that the crisis of the 1930s is the foundation of Prebisch’s theoretical proposal on dependency and development in Lat-in America. The crisis of 1929-1930 was the turning point that encour-aged him to revise and reinvent neoclassical economic theory, promote industrialization and import substitution, and, more importantly, to deeply restructure the role of the State in the region. The crisis leads to decision and action, and it implies and orientation towards the future, a new “horizon of expectations.” This horizon throughout the most part of the twentieth century in Latin America was development. The article also puts forward an interpretation of his program at the Economic Commission for Latin America and the Caribbean (ECLAC/CEPAL), also triggered by the crisis and oriented to the formulation of policies meant to overcome the crisis. Finally, the article shows how through his interactions with CEPAL sociologists, in particular José Medina Echavarría, Prebisch proposes a redefinition of his concept of crisis, shifting from an economic and junctural concept to a structural one: the crisis of peripheral capitalism

Measuring value created by business models in the sharing economy

The sharing economy forms a modern sustainable trend, combining the economic and social-ethical benefits of using, rather than owning. The article studies such factors as social approval, economic choice and digital coordination influencing the effectiveness of business models of the sharing economy, but the full value of which has not yet been established. The methodological basis of the research includes neoclassical and neoinstitutional economic theories and the concept of economic collaboration. Among the research methods applied are a value-based approach to discussing the substance of collaborative consumption business models, a critical analysis of the peculiarities of the economic choice between saving and consumption, and a qualitative analysis of demand on the basis of a socially confirmed interest in collaborative consumption. The research develops five types of models for creating and redistributing income in the sharing economy and finds that the key advantage of the sharing economy is the confirmed demand of a new class of consumers, which reduces the probability of marketing mistakes. The authors state that any form of collaborative consumption for ensuring transparency of transactions and correctness of taxation should be regarded as a service. We design an alternative model for assessing the lower bound of the value created, which takes into account the frequency of consumers’ repeated requests to previously provided services, assuming that social approval shifts the line of choice and does not create a new value. The theoretical and practical significance of the research lies in the contribution to the value measurement of shared consumption based on consumer signals in the form of public approval (social initiative or testing) and profitability evaluation (lower bound) of the shared use by the consumer.

The US consumption function: a new perspective

In the United States, the ratio of consumption to GDP has risen steadily over the past half century. In trying to understand why this ratio has increased so much, it is argued that standard models of the consumption function, built up from the neoclassical theory of constrained optimization, cannot offer a satisfactory answer. An alternative perspective is offered whereby aggregate consumption expenditure is seen as primarily the outcome of the population adopting widely upheld rules (‘meso-rules’) in a complex economic system. Aggregate consumption is viewed as the outcome of two contrasting historical processes: one mainly involving pre-committed, rule-bound choices and the other involving open-ended choices, made knowingly in the face of uncertainty, to adopt new meso-rules concerning the consumption of novel kinds of goods and services. The former process provides the degree of order that must be present in any complex system and the latter facilitates evolutionary change to occur. Using over half a century of data, the US consumption function is modelled successfully on the presumption that the economy is a complex system. The evidence supports the hypothesis that the ratio of consumption to GDP has risen because of the diffusion of a ‘culture of consumerism’ in the post-war era and that the limit of this process is now being approached, with important macroeconomic and social implications.

Once Again About Political Economy as a Scientific and Educational Discipline (on the Debated Aspects of the Problem)

Russian scientific economic literature continues to discuss the problem of the modern evolution of political economy as a science and its return as an academic discipline in the number of mandatory university courses. In this regard, the article, firstly, examines the historical fate and the current state of Marxist political economy, emphasizes its fundamental difference from other economic theories. Secondly, — considerable attention is paid to neoclassical economic theory and an academic discipline called «economics». The historical circumstances of the emergence of this term are shown and the place of neoclassicism in the Western classification of economic sciences is characterized. Thirdly, — for a comprehensive analysis of the economy, it is proposed to use general economic theory as a combination (a special kind of aggregate) of all modern schools, directions and programs of economic theory, unified in the object, but differing in the subject and method of research. It is emphasized that the role of the basis and historically and logically the initial component of this theory is played by political economy.