Disequilibrium Foundations of Equilibrium Economics [Paperback]

This 1984 book proposes a general model of economic analysis based upon disequilibrium.A review of literature on the stability of general equilibrium leads to considering a more satisfactory general model in which agents realize that they are in disequilibrium and act on arbitrage opportunities.A review of literature on the stability of general equilibrium leads to considering a more satisfactory general model in which agents realize that they are in disequilibrium and act on arbitrage opportunities.The most common mode of analysis in economic theory is to assume equilibrium. Yet, without a proper theory of how economies behave in disequilibrium, there is no foundation for such a practice. The first step in such a foundation is a theory of stability, and this book is primarily concerned with that subject. The author first reviews the older literature on the stability of general equilibrium and goes on to consider a more satisfactory general model in which agents realize that they are in disequilibrium and act on arbitrage opportunities. Topics explored along the way include optimal arbitrage behavior, the relation of perceived monopoly power to quantity constraints, and the role of money.Acknowledgments; 1. Introduction: disequilibrium analysis and the theory of value; Part I. Methods and Problems of the General Equilibrium Stability Literature: 2. The development of the stability literature; 3. Hahn Process models: formal treatment; Part II. A Model of Disequilibrium with Arbitraging Agents: 4. Allowing disequilibrium awareness; 5. The theory of the individual agent; 6. Transaction difficulties, individual price offers, and monopoly power; 7. Walras' Law and the properties of equilibrium; 8. Dynamics and stability; 9. Concluding thoughts; Appendix; References; Index.