March 31, 2015

How to get rid of supply-demand-equilibrium

Working paper at SSRN

Abstract  This paper provides a substantial reconceptualization of the serial clearing of the product market on the basis of structural axioms. The change of premises is required simply because from the accustomed premises only the accustomed conclusions can be derived and these are known to be inapplicable in the real world. This holds in particular for the still popular idea that the working of a market can be described in terms of the triad supply-function—demand-function—equilibrium. Structural axiomatization provides the complete and consistent picture of interrelated product market events.