All Posts Tagged With: "perfect competition"
Some Sins of Textbook Economics
People who are ignorant of economics are susceptible to all sorts of misunderstandings. Fortunately knowledge of even just the basics of sound economics is a powerful inoculant against many dangerous falsehoods and half-truths. This fact, however, does not imply that exposure to more economics is necessarily good. The sad reality is that economists too often [...]
4Jan2012 | Donald J. Boudreaux | 12 comments | ContinuedMarkets Are Messy, Part 2: The Errors of the Economists
The perfect-competition model assumes away the key function of actual competition, which is to discover the very things the model takes as given.
17Nov2011 | Steven Horwitz | 6 comments | ContinuedMisunderstanding Efficiency
Gary Galles is a professor of economics at Pepperdine University. Efficiency—getting the most value from a given amount of resources—is important in a world of scarcity. The more efficient people are, the better off they can make themselves. That’s why economists are always talking about efficiency. Unfortunately, what economists have to say on the subject [...]
1Mar2008 | Gary M. Galles | 2 comments | ContinuedHypnotized by Models
We live in an age where abstract models of the real world are held in high regard. Wall Street firms hire mathematicians and physicists to create sophisticated mathematical representations of various assets and markets. Meteorologists employ computer simulations in an attempt to anticipate the path of storms and predict next week’s weather. Marketing firms try [...]
1Mar2005 | and Gene Callahan | 1 comment | ContinuedMedical Care and Market Forces
I’ve heard it argued that market forces don’t apply to health care because there isn’t anything close to a free market in health care. There are all these government programs, and there’s insurance, and patients don’t have as much information as doctors. The list of market “imperfections” is a long one. Supply and demand just [...]
1Oct2003 | Russell Roberts | 4 comments | ContinuedIsrael Kirzner on Supply and Demand
Israel Kirzner misrepresents mainstream economics by his assertion that in explaining market price determination by supply and demand curves, it always assumes “perfect competition,” worse yet, perfect knowledge.[1] “The mainstream textbook approach . . . is, in one way or another, explicitly or implicitly, based on the assumption of perfect knowledge” and in which the [...]
1Jul2000 | James C. W. Ahiakpor | 0 comments | ContinuedA Puzzle and Its Solution: Rejoinder to Professor Ahiakpor
I was at first puzzled by Professor James C. W. Ahiakpor’s charge that I had misrepresented mainstream economics (by my statement that mainstream economics’ use of its supply-and-demand apparatus relies on the assumption of perfect competition, and thus perfect knowledge). I was puzzled because mainstream textbooks are quite explicit on this point.[1] Upon re-reading Professor [...]
1Jul2000 | Israel M. Kirzner | 1 comment | ContinuedThe Irresistible Force of Market Competition
This is the third in a series of articles laying out some foundational elements of modern Austrian economics. The first article is here, the second is here, and the final article is here. The systematic character of the market process derives, in the Austrian view, from the interplay of the actions of entrepreneurial human beings. [...]
1Mar2000 | Israel M. Kirzner | 6 comments | ContinuedThe Law of Supply and Demand
This is the first in a series of articles laying out some foundational elements of modern Austrian economics. The second article is here, the third is here, and the final article is here. The theory of supply and demand is recognized almost universally as the first step toward understanding how market prices are determined and [...]
1Jan2000 | Israel M. Kirzner | 32 comments | ContinuedInvisible Hand Obsolete?
Allen Murray’s Wall Street Journal article “Pushing Adam Smith Past the Millennium” (June 21, 1999) purports to discuss the relevancy of Adam Smith’s invisible hand for the 21st century. In reality, Murray is not talking about Smith or his invisible-hand metaphor at all. The assumption beneath his conclusion that “Smith’s ideas will need some rethinking [...]
1Nov1999 | Roy Cordato | 0 comments | ContinuedEverything for Sale: The Virtues and Limits of Markets by Robert Kuttner
Alfred A. Knopf • 1997 • 410 pages • $27.50 Robert Kuttner’s Everything for Sale carries the subtitle The Virtues and Limits of Markets. Unfortunately, Kuttner sees few, if any, virtues and many limits when it comes to free markets. Of course, it will surprise few that Kuttner holds this view. After all, he is [...]
1Nov1997 | Raymond J. Keating | 0 comments | ContinuedMonopoly And Competition
Mr. Smith is Economist for the United States Steel Corporation. Free competition is as much threatened by coercive attempts to perfect it as by direct abuse of monopoly powers According to the writers of economic textbooks, competition is not just competition; there is “perfect competition,” “imperfect competition,” “non-price competition,” “unfair competition,” “potential competition,” “workable competition,” [...]
1Nov1955 | Bradford B. Smith | 0 comments | Continued-
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