Why is economics the only discipline with so many curves going up and down? There is an alternative

Giovanni Dosi

Eurasian Business Review, 2024, vol. 14, issue 1, No 1, 34 pages

Abstract: Abstract Even the most rudimentary training from Economics 101 starts with demand curves going down and supply curves going up. They are so ‘natural’ that they sound even more obvious than the Euclidian postulates in mathematics. But are they? What do they actually mean? Start with “demand curves”. Are they hypothetical ‘psychological constructs’ on individual preferences? Propositions on aggregation over them? Reduced forms of actual dynamic proposition of time profiles of prices and demanded quantities? Similar considerations apply to “supply curves” The point here, drawing upon the chapter by Kirman and Dosi, in Dosi (Dosi, Foundations of Complex Evolving Economies Innovation, Organization and Industrial Dynamics, Oxford University Press, 2023), is that the forest of demand and supply curves is basically there to populate the analysis with double axiomatic notions of equilibria, both ‘in the head’ of individual agents, and in environments in which they operate. Supply and demand “curves”, I am arguing, are one of the three major methodological stumbling blocks on the way of progress in economics, the other related ones being ‘utility functions’ and ‘production functions’. There is an alternative: represent markets and industries how they actually works, and model them both via fully fledged Agent Based Models and via lower dimensional dynamical systems.

Keywords: Demand and supply curves; Aggregation; Utility function; Production function; Costs and prices; Dynamical systems; Agent based models (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40821-024-00253-y

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