The notion of the rate of profit and the stability of the market dynamics in a model with linear technology

This paper analyzes the local stability properties of the equilibrium solution of a multi-sectoral model with a linear production technology. The pivotal magnitudes in the adjustment process are the market rates of profit. Three different definitions of the market rates of profit are introduced which correspond to different types of the implicit decision behavior. It is shown that the stability properties of the market process depend essentially on this specification.