An entropy theory of value with reflections on the Arrow–Debreu model

Jing Chen () and James K. Galbraith ()
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Jing Chen: University of Northern British Columbia
James K. Galbraith: The University of Texas at Austin

Review of Evolutionary Political Economy, 2023, vol. 4, issue 2, 221-247

Abstract: Abstract We present a simple mathematical formulation of an entropy theory of value, consistent with evolutionary economics. It is a non-equilibrium theory, logarithmic in form, which explains the roles of monopoly and oligopoly as well as scarcity in determining economic values. It is an objective theory, rooted in physical realities and economic institutions, similar to the information theory developed by Shannon (1948). We compare this theory to the subjective, utility theory of the Arrow–Debreu model, the foundation of general equilibrium economics.

Keywords: Value; Entropy; Scarcity; Number of suppliers (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43253-023-00102-0

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