Introduction
Price was and remains the main tool that provides a proportional development of production and unity of interests of market relations. Basis for analyzing the structure of the economy, its challenges, opportunities and prospects for socio-economic development is based on the identification of the essential features of pricing, determining the structure of prices, price proportions.
Successful economic development of any country or subject of a market economy depends on clear and effective functioning of the price, because they reflected the entirety of economic relations and the relationship between members of social production. This is possible if the mastery of theoretical and methodological foundations. In modern economic science theoretical and methodological aspects of pricing based on the views of economists and acquire the continuing development in scientific writings of contemporaries.
Post Keynesian economic thought
Post Keynesian economic theory was conceived in the 70's XX century during the crisis of state regulation of the economy, which did not meet the new social realities. The structural crisis, a combination of high inflation and unemployment from recession, the formation and development of automated technological mode of production, the expansion of the socialization of capital increase internationalization of economic relations and expansion of transnational corporations require new forms and tools of state intervention in the economy. Adaptation of Keynesian theory to the new conditions of the global economy - the main task of Post-Keynesian Economics.
Structure of Post-Keynesian Economics has two main currents: English and American. English is represented by John. Robinson, P. Sraffa, N. Kaldor, M. Kaletskyy; American - S. Weintraub, A. Eyhner, X. Minsk, Mr. Davidson (Harcourt).
Distinctive features of Post-Keynesian Economics - sharp criticism of the main provisions of the neoclassical school, especially the theory of the marginal productivity and the theory of marginal utility; the revival of traditions of the classical school of political economy; study not only traditional economic, but also some social problems (Harcourt).
Ideas of J. M. Keynes and his followers have been used at different times in the development and implementation of economic policy in many industrialized countries, such as USA, UK, England, France and Germany. Especially popular are the recommendations of the Post Keynesian school relative to economic growth, national income, the theory of the cycle and other macroeconomic issues.
Neoclassical economic thought
Term "neoclassical theory 'belongs to the American scientist T. Veblen, who said that the representatives of the new direction of economic science have adopted the basic principles and ideas of the classical school.
Neoclassical economists really follow the principle of "pure" theory without subjectivism and psychological insight; the principle of economic liberalism; and the idea of self-regulating equilibrium of the economy. However, a new theory was formed in a fundamentally different economic conditions, on much broader and perfect basis of scientific knowledge, which affected a number of differences between the classical and neoclassical theories.
Neoclassical economic theory, combining the existing tradition of research in the late nineteenth - early twentieth century was a kind of compromise between the different directions of the economic science.
Price Theory
Let’s consider price theory based on views of the main representatives of the Neoclassical theory and Post Keynesianism.
Neoclassical representative - A. Marshall
Marshall rejected the thesis of the Austrian school of decisive role of subjective evaluations in the analysis of marginal utility prices synthetic theory of value created by combining the theory of marginal utility and production costs, announced about the equal significance of the same components of price (and utility costs) and lack of priority to determine prices. He believes that free pricing is the most important part of a unified system of equilibrium of the economy, consisting of mobile and informed about each other entities. The market price was seen as a result of price demand consistency, determined marginal utility and the offer price, determined by the marginal cost (Shove).
Based on the study of the interaction prices, supply and demand A. Marshall developed the theory of market equilibrium. It's a condition of the economy when is conformity between supply and demand, between resources and needs. To analyze the equilibrium price mechanism introduced in academic economics category equilibrium price - the price that balances supply and demand in the market of competitive goods, where equilibrium is established.
Studying interdependence of prices, supply and demand, Marshall showed that in conditions of free competition if the market price begins to exceed the equilibrium price, the offer will prevail over the demand and the price starts to decline. If the market price is below the equilibrium price, the demand begins to exceed supply and prices will increase.
Marshall methodological position is differed by a too simplistic approach to the "economic man" and his personal interest, abstracted from all other interests. Sending all the factors that prevented him to analyze in special vaults for "other things being equal," the power of an idea, he tried to build an idealized reflection of reality that can display real problems. The world of the economy, according to Marshall, developed under the influence of the regulator; all the powers and incentives affecting the demand-supply, tend to the same component. The only center of attraction is the price of serving a kind of magnet. For the reconciliation of the two alternative concepts the researcher introduces the theory of pricing and time factor points out that utility and demand play a crucial role in the short term. The real costs are important for the long term. If the manufacturer does not reimburse the cost, it will cause the reduction in production until equilibrium is established. Thus, the Marshall’s approach to the interpretation of issues as pricing is based on the theory of production costs, and the position on the Austrian school of marginal utility of goods. He takes into account both objective side (production costs) and subjective assessment (utility goods) and considers it as components of a universal law of supply and demand (Shove).
Despite its visual appeal, Marshall theoretical analysis for complex conditions present largely appears limited. Too unified circuit and logic concepts often can’t solve practical problems and oversimplify reality. This is not surprising, because every step of the analysis carried out by the author based on abstract initial conditions. By the way, Marshall understood this. But the clarity and visibility of the system continue to attract scientists, and the number of adherents of the neoclassical theory does not decrease.
Post Keynesianism representative - P. Sraffa
Sraffa draws attention to logical inconsistencies and contradictions of the neoclassical theory of marginal utility and marginal productivity of factors of production. Neoclassicists believed that income from production factors and their distribution can be displayed with the terms of their supply and performance (Harcourt).
But supply and production factors depends on the nature of the distribution of income. Thus, according to the neoclassical theory, the marginal product of capital determines the amount of profit. Value profit and wage changes the price of production, and this leads to changes in the value of capital cost, determined on the basis of price and production. Classics tried to show that prices are determined by the value of the goods. Social prices of production are regulated by prices of production of products, that are made in terms of average organic composition of capital, so that, deviations from cost price of production in areas with a high or a low-capital mutually redeemable, ie the sum of the prices of commodities will be the sum of value of goods.
According to Sraffa, the provisions of the classics are not supported by economic practice, instead it offers a theoretical pricing model on which there is a standard industry where the ratio of net product to the cost of material costs do not change under the influence of changes in the relations of distribution and prices (Harcourt). In this field of basic manufactured goods, ie those directly or indirectly related to the production of all other goods. Thus, the standard unit of product sector can be considered a measure of the cost of other goods.
Post Keynesianism representative - Joan Violet Robinson
Innovation of John. Robinson was in the fact that the pricing is considered on condition that each producer acts as the exclusive owner of his own product. Imperfect competition stimulates price discrimination that occurs when markets are separated geographically or by means of tariff barriers and the movement of goods connected with significant costs. There are also cases of "unintentional" discrimination when the goods are sold for special orders or discount system (King).
Special attention of researcher is attracted by the elucidate of the mechanism of pricing in a situation where the producer is a monopoly owner of the manufactured products and the buyer agrees to buy goods at a price established by the seller that brings monopoly profits.
Among the types of market structures (market situation) Robinson analyzed pure monopoly, oligopoly and monopsony. The existence of pure monopoly Robinson connects with a monopoly on the factors of production, particularly for raw materials. The behavior of the monopolist in the market is not constrained by other competing firms. It fully controls the production of goods and price, by getting a profit. However, complete control is possible only on condition that the manufacturer owns the material of production factors, or the marginal price of factors will rise at the same time with rising prices of goods (King).
Monopolist affects the price by reducing production. But the lower limit of production volume, as in perfect competition, determined the optimal cost per unit of output, further reducing production leads to higher costs and reducing profit on unit price.
There is another significant factor that limits the power of monopoly in the market - a decrease in demand with rising prices and, therefore, the decrease in sales.
So pure monopoly, according to Robinson - this is more a theoretical concept, not a real situation. In the market it is just as unlikely as perfect competition.
The real market is something intermediate between pure competition and pure monopoly, and, according to Robinson, this situation clearly reflects factors of monopolistic behavior in the market. This type of market controlled by a few firms is oligopoly. Pricing in conditions of imperfect competition. The feature of oligopoly is the interdependence of decisions dominant firms in the industry pricing policies. No such a solution can be taken without regard to the possible countermeasures from competitors. The activities of competing firms (not only costs and demand, as the monopoly) - this additional restriction, which the company must take into account in determining the optimum prices and production volumes. Therefore, oligopoly model involves competition.
However, competition in monopoly pricing in which competitors try to win the leadership and set their own prices, which would include monopoly profits by an oligopoly ends usually by agreement, because there is interdependence between the actions of competitors, if one competitor increases price he loses customers, and decrease makes other competitors also cut prices. So usually oligopolists agree to limit prices.
Thus, under conditions of oligopoly carrying out the own pricing policy is impossible: competition loses its perfection and gaining new forms, which are synthesized monopoly and competition, which makes it possible to combine their strengths and forces to come to terms with their combination of deficiencies. This is reflected in the fact that the price loses its elasticity by increasing prices decreasing level of supply, decreasing demand.
However, Robinson points out that price competition in oligopoly does not stop it at the expense of quality product modifications, changes its functionality, improved advertising, new forms of trade (King). A product can be replaced by another with the same species, but higher grade, that is expensive. The buyer considers quality, transportation costs, care, loan packaging, appearance. In this way, the differentiation of a homogeneous product that provides new of its kind the same monopolistic position in the market.
Сonclusion
Based on the disclosure of major theories of prices we can conclude about the diversity of this economic category. For its objective knowledge complex, many-sided investigation is required. Price - is an economic category, which acts as a form of monetary expression of value (value) goods, and is influenced by system factors of pricing (economic, technical, technological, psychological, political, etc.) that have a different focus and potential impact, depending on the specific situation in a period of time. Accordingly, the process of price formation is associated not only with production, but market conditions. Price reflects the effect of a number of economic laws, organically inherent in commodity production, the law of value, supply and demand, money circulation.
Restriction by any one approach to the disclosure of the price and its systemically factors in setting prices leads to of groundless conclusions. It should be take into account that the pricing -This is a dynamic process, and the impact and importance of each factor changes over time.
The static equilibrium theory only serves as an introduction to economic research. Dynamically changing supply and demand factors, the competitive situation on the market changing institutional environment, government pricing policy, tax policy, developing various kinds of informal ties. In addition, current economic analysis, marketing research is impossible without a thorough consideration of psychological factors of consumer behavior.
The use of system concepts of prices based on comprehensive analysis of factors contribute to greater pricing reasonableness of prices, improving economic relations, the development of an effective mechanism of price control. Perspective development of this concept is caused by the widespread use of information technology, increasing opportunities for more accurate account of an increasing number of factors.
Works Cited
Shove G. F. The Place of Marshall’s Principles in the Development of Economic Theory. The Economic Journal, Vol. 52, No. 208. 1942: 294-329 Web. 21 June 2016. <http://people.ds.cam.ac.uk/mb65/library/shove-1942.pdf >.
Harcourt, G.C. The Structure of Post-Keynesian Economics: The Core Contributions of the Pioneers. New York: Cambridge University Press, 2006 Web. 20 June 2016. <http://www.nuevatribuna.es/media/nuevatribuna/files/2013/03/12/harcourt_structureofpost-keynesianeconomics.pdf >.
King, J. E. A Brief Introduction to Post Keynesian Macroeconomics. Wirtchaft und Gesellschaft. 39 (4), 2013 Web. 19 June 2016. <http://wug.akwien.at/WUG_Archiv/2013_39_4/2013_39_4_0485.pdf >.
