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Unproductive Expenditure in Manufacturing, by Alexander M. Thompson III (Aug. 1990, revised Jan. 1991)

A behavioral model is developed to explain the magnitude of surplus and the division of surplus into unproductive and profit for oligopoly firms in the manufacturing sector of advanced capitalist economies. Particular attention is focused upon the determinants of interfirm, nonprice rivalry as an important component of unproductive expenditure. The explanatory models of profit and unproductive expenditure are then tested using U.S. data. Finally, the implications of these models and estimates for industry and aggregate capital accumulation are drawn.

Published: Cambridge Journal of Economics, June 1992, 16(2): 147-68.