Visualizing the Effects of Markups on the Choice of Technique

Abstract

This article extends to unequal rates of profits a derivation of prices of production from a linear program. A partition of the price-wage space is illustrated in an example with two produced commodities. The variation in the solution of the LP with perturbations of relative markups is illustrated. This analysis provides an intuitive explanation of how the re-switching of techniques and of how capital reversing can emerge in non-competitive markets.