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Competitive markets and “as if” methodology

Author

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  • Antonio Quesada

    (Universitat Rovira i Virgili, Spain)

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.

Suggested Citation

  • Antonio Quesada, 2005. "Competitive markets and “as if” methodology," Microeconomics 0504003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpmi:0504003
    Note: Type of Document - pdf; pages: 8
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0504/0504003.pdf
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    References listed on IDEAS

    as
    1. Boland, Lawrence A, 1979. "A Critique of Friedman's Critics," Journal of Economic Literature, American Economic Association, vol. 17(2), pages 503-522, June.
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    More about this item

    Keywords

    “As if” methodology; Competitive market; Market aggregation; Market simulation; Price aggregation.;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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