ABSTRACT
Alfred Eichner (1973, 1974, 1975, 1976) presented us with an underappreciated theory of oligopoly that was characterized by an attempt to derive a determinate answer to the level and changes in the markup, rather than leaving this up to some general notion of the "degree of monopoly." He arrived at his answer by including investment plan considerations of the "megacorp"—his vision of the archetypical oligopolistic, industrial-sector firm that dominates advanced capitalist economies—in the pricing decisions made by this firm. In Eichner's model, the markup is chosen so as to balance the incremental benefits from new investment with the incremental costs associated with internally generating the funds needed to finance this investment. Part of the significance of Eichner's theory is that it brought the pricing decision of the oligopolistic firm together with the general Post Keynesian emphasis on growth as the goal of the firm and on the general accumulation behavior of the economy. This, of course, makes the prices set by the megacorp a long-term phenomenon that is inconsistent with short-term profit maximization and Marshallian price formulations.
