Competitive markets and “as if” methodology

Antonio Quesada ()

Microeconomics from EconWPA

Abstract: Two results showing the limitations of the “as if” methodology are proved under relatively mild assumptions. In an interpretation of the results, a competitive market cannot simulate the outcome of a market M in which the single price assumption does not hold. In a second interpretation, the market M resulting from the aggregation of a finite number of competitive markets is not competitive. In both cases there is no ground to sustain the fiction that M operates as if it were competitive.

Keywords: “As if” methodology; Competitive market; Market aggregation; Market simulation; Price aggregation. (search for similar items in EconPapers)
JEL-codes: D40 E10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe and nep-mac
Date: 2005-04-11
Note: Type of Document - pdf; pages: 8
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0504003

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