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Technical Change and the Equilibrium Profit Rate in a Market with Sequential Bargaining
Author(s) -
Skillman Gilbert L.
Publication year - 1997
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00032
Subject(s) - economics , rate of profit , profit (economics) , wage rate , microeconomics , profit rate , technical change , general equilibrium theory , competitive equilibrium , wage , matching (statistics) , capital accumulation , labour economics , macroeconomics , statistics , mathematics , productivity
The Marxian theory of the tendentially falling rate of profit is shown to be consistent with a competitive equilibrium scenario for labor markets in which wages are determined by sequential bargaining within a stationary matching process. The central result establishes that if trade is possible, there exists a set of individually rational capital‐using, labor‐saving technical innovations which lower the equilibrium rate of profit if adopted universally. The model yields as an important special case wage conditions under which the universal adoption of any such innovation reduces the equilibrium rate of profit.