Is the tatonnement hypothesis a good caricature of market forces?

Michel De Vroey

Journal of Economic Methodology, 1998, vol. 5, issue 2, 201-221

Abstract: Three points are made in this article. First, it is argued that general equilibrium theory should not be limited to the issues of existence and stability. A third subject-matter should be put on the agenda, namely the organization of trade. Tatonnement should be seen as the specific assumption made in this respect within the Walrasian research programme. Second, it is argued that the tatonnement set-up, though a quite complete institutional arrangement, turns out to be a contrived construction, as it combines basically incompatible elements - planning and private ownership. There is thus a fundamental discrepancy between the effective purview of the Walrasian research programme, a tatonnement economy, and its alleged explanandurn, a decentralized economy. Third, three possible arguments in favour of the tatonnement hypothesis are considered: the 'realistic', the 'benign neglect' and the 'lack of alternative' arguments. Only the latter is considered as a worthy defence of it.

Keywords: general equilibrium; theory; tatonnement; auctioneer; Walrasian theory (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (9)

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DOI: 10.1080/13501789800000013

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