Abstract
There is a long history in economics of using market selection arguments in defence of rationality hypotheses. According to these arguments, rational investors drive irrational investors out of asset markets and profit maximizing firms drive non-maximizing firms out of goods markets. In this article we present the history of these arguments and discuss the literature that examines whether these arguments for market selection, and its impact on efficiency, are correct.
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Blume, L., Easley, D. (2018). Market Competition and Selection. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2028
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2028
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