Capital and Walrasian Equilibrium
One of the issues that Ivor F. Pearce during his unusually productive and distinguished career has helped to illuminate, is the integration of capital into what may be called the Walrasian vision of our microeconomic world. A simple, yet common, version of this Walrasian perspective is that of a collection of consumers and firms, each making buying and selling decisions relevant for single isolated instants sequentially as continuous time passes.2 (An instant is characterised as an arbitrarily small interval of time.) These decisions interact simultaneously through perfectly competitive markets. Markets, in turn, are guided (perhaps by ‘auctioneers’) according to certain rules of adjustment. Dynamic behaviour across time is generated as consumers and firms react to the changing market prices dictated by the adjustment rules.
KeywordsProduction Function Supply Function Output Price Entry Cost Walrasian Equilibrium
Unable to display preview. Download preview PDF.
- Arrow, K. J. and F. H. Hahn (1971) General Competitive Analysis (San Francisco: Holden Day).Google Scholar
- Baumol, W. J. (1965) Economic Theory and Operations Analysis, 2nd edn (Englewood Cliffs, NJ: Prentice-Hall).Google Scholar
- Bliss, C. J. (1975) Capital Theory and the Distribution of Income (Amsterdam: North-Holland).Google Scholar
- Burmeister, E. and A. R. Dobel (1970) Mathematical Theories of Economic Growth (New York: Macmillan).Google Scholar
- Harcourt, G. C. and N. F. Laing (1971) Capital and Growth (Harmondsworth, England: Penguin).Google Scholar
- Vickers, D. (1968) The Theory of the Firm: Production, Capital, and Finance (New York: McGraw-Hill).Google Scholar