Up to this point, average variable and fixed costs have been held constant so that a change in price could be analyzed in terms of a change in the margin above costs, or average corporate levy. Now the procedure is to be reversed. The average corporate levy will be held constant so that a change in price can be analyzed in terms of a change in average variable and fixed costs.

This shift in focus bears on more than just the pricing policies of the megacorp. It touches on the distribution of income, for the change in average variable and fixed costs which is to be emphasized in this chapter is the change that occurs when the rates of compensation paid by the megacorp to those who supply it with essential inputs or otherwise have a claim to a portion of its revenues are revised, usually upward. Any such increase in the rates of compensation received by certain of the megacorp's constituencies will be one element in the ongoing dynamic that characterizes pricing behavior in the oligopolistic sector of the economy. The other element, at least insofar as costs are concerned, pertains to the secular growth of output per worker. This windfall from technological progress is not to be confused with the change in productivity which occurs when various inputs are used in different combinations. The latter is essentially a short-run phenomenon, and is precluded, in the present analysis, by the assumption of fixed technical coefficients.