The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Fixprice Models

  • Joaquim Silvestre
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_419

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.

Keywords

Bargaining Comparative statics Dual decision hypothesis Dynamic stochastic macroeconomic models Employment Excess demand and supply Fixprice models Full employment General equilibrium Imperfect competition Inflation Market power Microfoundations Monopolistic competition Oligopoly Oligopsony Patinkin, D. Price control Real business cycles Rent control Second best Staggered prices Staggered wages Sticky prices Sticky wages Unemployment Voluntariness Wage control Walrasian equilibrium Walras–Samuelson tâtonnement 

JEL Classifications

F3 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Joaquim Silvestre
    • 1
  1. 1.