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The Gravitation of Market Prices as a Stochastic Process

Saverio Fratini and Alessia Naccarato

No 195, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: The theory of value has been based ever since Adam Smith on the idea that the market prices of commodities, those at which actual trade takes place, gravitate around a central position known as natural prices. This paper seeks to develop a statistical idea of the process in question and suggests in particular that market prices can be said to gravitate around natural prices if the probability of their means being very close to natural prices after t observations tends to 1 as t tends to infinity. A set of possible conditions leading to that result is also presented.

Keywords: market price; natural price; gravitation; random variables; consistency (search for similar items in EconPapers)
JEL-codes: B51 C32 C62 D46 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: The Gravitation of Market Prices as A Stochastic Process (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0195

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