ABSTRACT
The recent empirical investigations of the competitive process have been largely based on testing the persistence of the profit rate differentials among economic units. This general line of investigation has been broadly based on the technique introduced by Mueller (1986). Mueller suggests a time series analysis as contrasted to the then widely used, but persuasively challenged, techniques based on cross-section investigation of the relation between the market power and the level of profitability. The new line of inquiry has enabled researchers to develop a dynamic perspective as regards capitalist competition. As the following literature developed, two critical issues have been of particular concern in the empirical investigations: (i) are the inter industry or intra industry differentials expected to disappear over time because of capitalist competition, and (ii) is it the returns to the total capital stock or to the capital invested in the best practice (least cost) techniques of production which are expected to be equalized?
