Pricing and Profits Under Globalized Competition

February 8, 2007

This paper builds on Post Keynesian theory of markup pricing to outline the microfoundations of a theory of US economic hegemony in an age of global production networks.

U.S. firms have successfully used global production networks to reduce costs and raise markups without pushing up final goods and services prices. The situation requires a modification to Post Keynesian pricing theory and has implications for the scope of the firm, for income distribution, economic growth and the balance of payments.

Author: William Milberg    
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