2 
in most cases replacing an old equipment with a technically 
superior one will incidentally also involve an increase in 
capacity. ( Or, in the case of a shrinking market - think 
of the steel industry - the worry about the market will 
exist even without expansion ). 
Now in all cases where capacity does matter - and that probably 
is the majority of all cases - there is a strong presumption 
that the additional market will be sought abroad. In fact, 
it may be presumed that the behaviour, price policy 
of firms is fundamentally different in domestic and foreign 
markets. Very broadly speaking, the domestic market is 
dominated by the policy of conventional mark-up a la Kalecki, 
( fix price according to Hicks ), whereas the foreign markets 
are predominantly flex-price, i.e. they are nearer to the 
pattern of the markets for agricultural products though not 
quite the same. There is, very briefly, more competition on 
these markets. Now the essence of my contention is that 
for an aggressive policy of gaining new sales the choosen terrain 
is almost always abroad and not at home. 
This contention would seem more easily evident in a pre-war 
economy with heavily protected markets, which in practice 
would be subject to open or tacit cartel^, agreements. 
\ 
But the mentality appropriate to these institutions has not 
disappeared. 5ft b 
Aggressive policies on the domestic market are restrained 
by the fact that there is in many cases only a restricted 
number of competitors and their reacttion must be correspondingly 
strong.