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The New Palgrave Dictionary of Economics pp 4807–4816Cite as

Palgrave Macmillan

Fixprice Models

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Abstract

The general competitive theory of markets (Walras, Arrow-Debreu) presupposes that no agent has market power and that prices and wages instantaneously adjust to equilibrate price-taking supply and demand. Fixprice models follow its emphasis on the interactions across markets, but under the more realistic assumption that markets frequently operate under excess demand or supply, with prices often exceeding marginal costs because prices and wages adjust slowly, or because of market power. The original fixprice models, which adopted the short-run method with static expectations, are the precursors of neo-Keynesian dynamic macroeconomics based on market power and the stickiness of wages or prices.

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95189-5

    Joaquim Silvestre

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  1. Joaquim Silvestre
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Silvestre, J. (2018). Fixprice Models. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_419

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