A theoretical framework for the analysis of variations of the desired mark-ups

ABSTRACT

The objective of this article is to formulate a representation of the price formation process which is satisfactorily general, and independent of the special characteristics propitiated by an occasional situation of low instability, as is implicit in the particular representation synthesized in the rule of a fixed mark-up over direct costs. First of all, the article presents a synthesis of the main arguments presented by post-Keynesians on what the author calls the strategic determination of desired mark-ups. He then set out to recuperate the concept of user costs developed by Keynes and which, in his opinion, is well-suited for representing the expectational determination of desired mark-ups. Finally, the author proposes an analytical integration of these two determinations, given a set of market and economic structures. This integration is summarized in a general formula for desired mark-ups.

KEYWORDS:
Price formation; mark-ups