Market Theory and the Price System

by Kirzner, Israel M.; Boettke, Peter J.; Sautet, Frederic E.

• ISBN13: 9780865977600
• ISBN10: 0865977607
• Format: Paperback
• Copyright: 2011-05-31
• Publisher: Liberty Fund

Summary

"Market Theory and the Price System" was published in 1963 as Kirzner's first (and only) textbook. This volume presents an integrated view of Austrian price theory. The basic aim of the book is to utilise the tools of economic reasoning to explain the market process. The unique framework Kirzner develops for microeconomic analysis, following Mises and Hayek, examines error in decision-making, entrepreneurial profit, and competition as a process of discovery and learning.

Author Biography

Peter J. Boettke is the BBT Professor for the Study of Capitalism at the Mercatus Center and a University Professor of economics at George Mason University. His publications include Why Perestroika Failed: The Economics and Politics of Socialist Transformation and Calculation and Coordination. Since 1998 he has been the editor of the Review of Austrian Economics. Frdric Sautet is a Senior Research Fellow at the Mercatus Center and a member of the graduate faculty at George Mason University. He is the author of An Entrepreneurial Theory of the Firm and has widely published on entrepreneurship.

Table of Contents

Introduction to the Liberty Fund Edition	p. xi
Preface	p. xvii
The Nature and Tasks of Market Theory	p. 1
The Individual and the Market
The Market System
The Foundations of Market Theory
The Individual and Economic Behavior
Economic Theory and Economic Reality
Market Theory, Economic Theory, and Economics
Summary
The Market: Its Structure and Operation	p. 14
The Conditions Under Which the Market Operates
Market Roles
The Structure of the Market System: Vertical Relationships
The Structure of the Market System: Horizontal Relationships
The Analysis of Human Action in the Market: The Concept of Equilibrium
Complete and Incomplete Equilibrium
The Pattern of Market Adjustment
The Changing Market
The Market System as a Whole
Summary
Efficiency, Coordination, and the Market Economy	p. 35
The Economic Problem
Society and the Economic Problem
The Problem of Coordination
How the Market Solves the Problems of Coordination
The Coordinating Function of Profits in a Market Economy
Summary
Utility Theory	p. 48
The Scale of Values
Marginal Utility
Diminishing Marginal Utility
The Marginal Utilities of Related Goods
Marginal Utility-Some Further Remarks
Marginal Utility and the Conditions for Exchange
Summary
Consumer Income Allocation	p. 68
Marginal Utility and the Allocation of Income
The Position of Consumer's Equilibrium
A Geometrical Illustration
The Effects of Changes
The Individual Demand Curve
Some Remarks on Expectations
Summary
Market Demand	p. 92
Market Demand
The Market Demand Curve
Demand Elasticity
Measures of Elasticity
Market Demand as Seen by the Individual Entrepreneur
Demand and Revenue
Demand and the Prices of Other Goods
Demand as a Market Force
Summary
Market Process in a Pure Exchange Economy	p. 113
The Nature of Competition
A Simple Case of Price Competition
Simple Price Competition Without Perfect Knowledge
The Market for Several Non-Producible Goods: The Problem
The Equilibrium Situation for the Multi-Commodity Market
The Multi-Commodity Market Without Perfect Knowledge
Monopoly in a Pure Exchange Market
The Agitation of the Market
Summary
Appendix
Production Theory	p. 153
The Economic Aspect of Production
Production by the Isolated Individual
Production in Society
Production in the Market Economy
Factors of Production
Production Functions and Isoquants
The Shape of the Isoquant and the Substitutability of Factors
Changes in Factor Proportions, and Changes in the Scale of Factor Employment
Returns to Scale
The Laws of Variable Proportions: The Problem
The Laws of Variable Proportions
Economic Implications of the Laws of Variable Proportions
The Least-Cost Combination
Graphic Illustration of the Least-Cost Combination
Summary
Costs and Supply	p. 197
Costs and Rents
Opportunity Costs and Supply Theory
Prospective and Retrospective Costs
Capital Goods and Cost Theory
Factor Divisibility and Short-Run Per-Unit Costs
Short-Run Costs and Their Effect on Supply
Long-Run Costs and Supply
Factor Prices and Supply
Summary
Partial Market Processes-The Determination of Product Prices and Factor Prices	p. 227
The Market for a Single Product
Long-Run Equilibrium
Short-Run Equilibrium in the Single-Product Market
Equilibrium in the Single-Product Market in the Very Short Run
Adjustment to Change in a Market for a Single Product
The Market Process in a Market for a Single Product
The Market for a Single Factor of Production Equilibrium in a Factor Market
The Market Process in a Market for a Single Factor of Production
Toward the General Market Process
Summary
The General Market Process	p. 255
A Preliminary Model
The Preliminary Model and the General Model
General Market Equilibrium Conditions
A General Market in Disequilibrium
Disequilibrium in the General Market and Entrepreneurial Opportunities
Entrepreneurial Activity and the General Market Process
Partial Analysis and the Analysis of a General Market
Toward Further Extensions of the General Market Model
Summary
Monopoly and Competition in the General Market	p. 286
The Monopolized Resource
The Resource Cartel
Restriction of Supply: A Special Case
Combinations of Resource Buyers
Monopoly in Production
The Consequences of Monopoly Output Restriction
The Monopolist-Producer as a Resource Buyer
Further Remarks on Monopolized Products
The Single Producer Without Monopoly
Some Remarks on the Model of ôPureö or ôPerfect ö Competition
Monopolistic Price Discrimination
Summary
The Price System and the Allocation of Resources	p. 321
The Possible Levels of ôWelfareö Appraisal
Misallocation of a Resource in a Market System
Imperfect Knowledge, the Source of Resource Misallocation
Prices, Profits, and the Reallocation of Resources
The Entrepreneur and Resource Allocation
Resource Mobility and the Allocation Pattern
Monopoly as an Obstacle to Correct Resource Allocation
Artificial Obstacles to Correct Resource Allocation
Summary
Appendix: The Application of Market Theory to Multi-Period Planning	p. 335
Multi-Period Decisions in the Pure Exchange Economy
The Intertemporal Market
Speculation as an Aspect of Intertemporal Markets
Multi-Period Decisions of Producers
The Place of Capital Goods in Production
Index	p. 347
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