For A. A Alchian, under uncertainty, profit maximization cannot be a rule of action for the firm. Success depends on results, not motivations: the decisions and criteria associated with them do not constitute a basis for understanding the behavior of firms.
What is important are the decisions and criteria dictated by the dynamics of the industrial system. Achieving a positive profit is the condition of business survival. The realization of the rule of survival may be the result of intentional behavior as a result of unforeseen or lucky circumstances.
For E. Zuscovitch, this type of analysis should be interpreted as a shift from behavior agents to control system: the choice of systems replace the choice of agents. The rule of survival is to achieve a positive profit for the company.
S. Enke developed a thesis that is in fact a complete reversal of Alchian's positions. He suggests that if a sufficient degree of competition prevails, all strategies built by companies need not pass the survival test, some lead to negative profits and therefore the elimination of firms. Companies with good strategies hold increasingly important market shares. The standard behavior (maximization) becomes the criterion for survival in a competitive environment.
For Friedman, the Alchian thesis is not really inconsistent with the presuppositions of classical rationality, as only firms that have a rational behavior (ex ante) will survive.
Tags : Profit Maximization, E. Zuscovitch, S. Enke, Economy of the Innovation
[...] Firms compete through technological innovation or imitation. the complexity of competition schumpétrienne The Nelson and Winter model takes into account only two types of behaviors: A policy of imitation permitted by a policy of R & D. An innovation policy aimed not to capture the information held by other firms, but to find exclusive information. For J. Lesourne, this approach aims to transform the information organization. The system tends to acquire new properties by changing the core of its business: the competitive system. [...]
[...] Resource management and technological innovation, sheet reading: The Netherlands C., Economics of Innovation (Chapter IV) 1. Optimization versus selection as the competition selection process: the first models "organic" from the firm The pioneering work of Alchian (1950): the rule of survival For A A Alchian, under uncertainty, profit maximization cannot be a rule of action for the firm. Success depends on results, not motivations: these are not decisions and their associated criteria that constitute a basis for understanding the behavior of firms. [...]
[...] Accordingly in the long run, the analysis can be said that the firms behave as if behaviors were optimizing. For Friedman, the Alchian thesis is not really inconsistent with the presuppositions of classical rationality, since only firms that have a rational behavior (ex ante) will survive. Firms that do not maximize tend to lose resources and grow under conditions that are increasingly difficult. The criterion of survival by Alchian says that achieved positive profits remains relevant. SG Winter noticed a flaw in Friedman's argument about the principle of maximization. [...]
[...] The model shows that firms are not under optimizations that are irretrievably removed. For HA Simon, firms seek targets they deem satisfactory rather than an optimization program. Unlike Alchian, Simon emphasizes on decision-making processes within organizations, although both acknowledge that the internal environment of the firm plays a major role in enhancing behaviors "viable" Competition and technical progress, an evolutionary model of industry Nelson and Winter treat the dynamics of competition within the industry, assuming a variety of research-development policy by businesses. [...]
[...] The selectional environment can be high or low depending on the competition, modes of regulation, technological competition, the degree of collusion. For these reasons less efficient firms can still survive. The ability to produce profit margins is a good operator of the selection process or rationality "limited" market. The selection process is more Darwinian than lamarkien; memory embedded in institutions and firms allows the transmission of experience. Through such a nonlinear process selected product technologies and new techniques are implemented. [...]
using our reader.