ANDREWS (Philip Walter Sawford).
Manufacturing Business. With a Preface by Henry Clay.
A highly influential work by the Oxford industrial economist Philip Andrews (1914-1971) in which he set out a ‘potentially revolutionary analysis of firms in competitive oligopolistic markets. It included a non-marginalist, non-equilibrium theory of pricing and capacity choices. Firms were predicted to set prices by adding a mark-up to their ‘normal’ costs at their target levels of capacity utilization. The size of the mark-up would be limited by the difference between their own costs and their estimates of the opportunity costs of other firms with the knowledge to supply duplicates of their products and steal their markets. Only when their assessments of these cost conditions changed would they change their prices. Firms would also be expected to hold spare capacity in order to satisfy new customers without forcing established ones to turn their goodwill elsewhere.’
‘After his death, Andrews’s work was increasingly used as a building block in Post-Keynesian price theory. During his lifetime, however, his analysis failed to have a revolutionary impact, partly because most economists tried to make sense of it in orthodox terms; partly because Andrews generated confusion by writing in the language of business, not of textbook economics’ (New Palgrave).
