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Dr. Steve Keen Profile picture
@ProfSteveKeen
Jun 18 • 11 tweets • 1 min read • Read on X
1/ Economist Paul Ormerod's simulations challenge everything we think we know about competition. Image
2/ He modeled 1,000 consumers with different preferences and firms with varied price/quality offers.
3/ Over 40 simulated quarters, prices fell and quality improved—even when a dominant firm remained.
4/ Many new entrants failed, and market structure followed a power law.
5/ Market concentration didn't mean higher prices or lower quality. Flexibility and innovation mattered more.
6/ Dominant firms can coexist with healthy competition and consumer benefits.
7/ The number of firms was a poor predictor of market outcomes.
8/ Policy should focus on actual prices, quality, and innovation, not just the number of competitors.
9/ Ormerod's work is a wake-up call for economists and regulators.
10/ Want to see more research that challenges economic orthodoxy?
Follow for more, or join my exclusive community where I hold live classes every week and claim a free book to get started.

#Economics #Marketstevekeen.com/books

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More from @ProfSteveKeen

Dr. Steve Keen Profile picture
Jun 15
1/ Did you learn in economics that firms always face rising marginal costs as they produce more? The real world tells a different story. Image
2/ Empirical research shows most firms operate with constant or even falling marginal costs as output increases. Efficiency often rises as they approach capacity.
3/ Traditional models assume diminishing marginal productivity, but real businesses get more efficient, not less, with scale.
Read 10 tweets
Dr. Steve Keen Profile picture
Jun 13
(1/9) Netflix's Lucifer perfectly explains why economists ignore reality.

When the devil himself tells people who he is, they refuse to believe it.

The same thing happens when banks reveal how money really works; economists just pretend they never heard it. Image
(2/9) Your bank lied to you. They don't take your savings and lend them out. When you get a loan, they literally create new money out of thin air by typing numbers on a computer. Your deposit comes from someone else's loan, not the other way around.
(3/9) Don't believe me? In 2014, the Bank of England admitted it: "Bank lending creates deposits." Explanation: Banks create money when they make loans. They don't need your savings first. Economics textbooks have been teaching the opposite for 100+ years.
Read 9 tweets
Dr. Steve Keen Profile picture
Jun 11
1 / Why deficit reduction could CRASH the economy - insights on Trump/Musk economic policies that conventional economists won't tell you. Government debt is NOT like household debt.

2/ The administration aims to cut $1 trillion in spending and eventually eliminate the deficit. But they fundamentally misunderstand how money works in our economy.
2/ The administration aims to cut $1 trillion in spending and eventually eliminate the deficit. But they fundamentally misunderstand how money works in our economy.
3/ Musk told Rogan: "If we don't take action...the entire government budget will be paying interest." But this ignores how our financial system actually operates.
Read 9 tweets
Dr. Steve Keen Profile picture
Jun 9
Donald Trump's economic adviser, Steve Moran, just figured out why American factories are dying, but he missed the real villain who destroyed US manufacturing decades ago. Image
(2/9) Every global trade needs dollars first. When China buys from Australia, they convert to dollars, then buy Australian goods. This artificial demand makes dollars overvalued, killing US manufacturing competitiveness.
(3/9) Britain lived this exact nightmare before WWII with the pound. The same overvaluation, same de-industrialization, and the same decline from global empire to struggling nation—history repeating with America.
Read 10 tweets
Dr. Steve Keen Profile picture
Jun 3
"Why Economists Are Dead Wrong About Climate Change"

(And What You’re Not Being Told)

Imagine this:

Your doctor says you have a 5% chance of a heart attack.
Another doctor says, “You’ll be dead in 5 years.”

Who do you trust?

That’s economists vs. scientists on climate change.

Let’s unpack why.Image
(2/8) Economists say:
“3°C warming = 3% GDP loss by 2100. No big deal!”
But here’s the catch:
They assume climate change is like a slow leak in a tire.
Scientists say it’s a grenade with the pin pulled.
(3/8) Scientists scream:

1.5°C: Crops fail, storms rage.

3°C: Collapsing food systems.

5°C: “We might not survive.

Economists? They’re still calculating “0.05% slower growth” like it’s a rounding error.
Read 8 tweets
Dr. Steve Keen Profile picture
May 26
1/ #Trump wants to eliminate America's #trade deficits, but Larry Summers and Warren Mosler from MMT say he's wrong because "imports are benefits and exports are costs." Image
2/ They're both missing the monetary reality. When America exports, it creates new money in the domestic banking system. When it imports, it destroys money.
3/ I ran it through Ravel for double-entry bookkeeping at national levels, the data is crystal clear. Exports increase both deposit accounts and bank reserves - creating money. Imports reduce both - destroying money.
Read 11 tweets

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