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Some Short-Run Microeconomic Effects of a Market Incentive Anti-Inflation Plan

California Institute of Technology University of Delaware

This article examines the short-run effects of Abba Lerner and David Co-lander's Market Anti-Inflation Plan (MAP) with a microeconomic model of firm pricing and output. It proves that MAP assures a constant (Paasche)price level. For an economy in which all firms face downward-sloping demand, MAP increases output, as MAP acts as an economywide Ramsey pricing scheme, reducing firms' monopoly power. Perfectly competitive industries have reduced supply elasticity, which can either increase or reduce their output.

Public Finance Review, Vol. 15, No. 2, 199-218 (1987)
DOI: 10.1177/109114218701500205


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