Unnoticed predecessors of the early Negishi theorems

Takashi Negishi

International Journal of Economic Theory, 2008, vol. 4, issue 2, 167-173

Abstract: From the studies of the history of economic thought, we can learn that many theorems of the modern general equilibrium theory were well anticipated in the classical economics and the economics of the marginal revolution. For example, first, what Johann Heinrich von Thünen (1783–1850) did, in his strange theory of natural wage, can be interpreted as an early, pioneering attempt to use the so‐called Negishi method (1960), which is now intensively used for the proof of the existence theorem and the numerical calculation of a general equilibrium. Second, as is well known, no exchanged transactions are permitted out of equilibria in the famous Walrasian tatonnement adjustment process towards market equilibria. Against this, the importance of transactions carried out at disequilibria is emphasized in the studies of the so‐called Hahn–Negishi non‐tatonnement process (1962). As a matter of fact, in the classical economics, this is exactly what William Thomas Thornton (1813–1380) insisted against the authority of John Stuart Mill (1800–1873). Finally, subjectively perceived (often kinked) demand curves are considered in my proof of the existence of a general equilibrium in the case of monopolistic competition (1961). To my surprise, however, I found later that such demand curves were already hidden in Adam Smith's (1723–1790) consideration of markets and the division of labor, and that the increase of demand never fails to lower the price of goods.

Date: 2008
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