The Strategic Types and the Aims of Economic Adjustment
When the classical theorists investigated the question of how price formation found its own level, how national income was distributed, etc., they nearly always based themselves on the presupposition that free competition existed. This presupposition involves a number of elements, but the one which has the greatest bearing on the shape that the theory will assume, is the presupposition that none of the economic individuals operating in the market, in production, etc., plays such an important role that they are capable on their own of exercising a marked influence on the market situation. On the basis of this presupposition, it was natural that a theory was developed where, in practically every sphere, it was taken for granted that every individual acts as though the general features of the market situation, especially prices, is given, and cannot be influenced by him. Thus, the only course then left to the individual, was to adjust himself to the various given situations; the consumers, for example, adjusted their consumption, and producers adjusted their production to given prices, etc. The only exception was to be found in the very opposite extreme, viz. a single producer who exercised a monopoly.
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- 1.The pioneering work in this domain was carried out by my late friend F. Zeuthen.Google Scholar
- 1.The connection with the modern theory of games of strategy is obvious.Google Scholar
- 1.The expression ‘better’ price here means a higher price where the seller is concerned, but a lower price where the purchaser is concerned.Google Scholar
- 2.This is dealt with in greater detail in my polypoly theory, 1932–1933, Section 7315.Google Scholar
- 1.The forced supply curve is dealt with in greater detail in my polypoly lectures, 1932–1933, Section 7316.Google Scholar
- 2.The ordinary (direct) supply curve is dealt with in Section 10i.Google Scholar
- 3.This shows the great power enjoyed by the option poser.Google Scholar
- 1.Cf. my polypoly lectures 1932–1933 or 1941.Google Scholar