Post Walrasian and Post Marxian Economics
It is widely believed that the failure of the socialist experiment should have had a devastating effect on radical economics. Yet radical economics is not only alive and well, but flourishing. Years before the official demise of Marxist-socialism, they had broadened their critique of standard economics well beyond the received Marxist literature. Indeed, their arguments offered striking parallels with the mainstream critiques of Walrasian economics provided by the newly developing strand of thought I shall refer to as "information economics." In Walrasian economics, information is free. Moreover, there are no costs associated either with making or enforcing contracts. But with imperfect and costly information and incomplete risk markets, the field of information economics has established that: 1) in general, markets are not (constrained) Pareto efficient; 2) markets may not clear; 3) markets may not exist, or when they exist, may be thin; 4) rents are pervasive, and indeed, reputation rents are necessary to ensure that high-quality products get produced, that workers do not shirk, and so on; 5) even when there are many participants in a market, competition may be highly imperfect; and 6) the distribution of income matters for economic efficiency.
Volume (Year): 7 (1993)
Issue (Month): 1 (Winter)
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References listed on IDEAS
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- Steven Salop, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 393-406.
- Steven Salop & Joseph Stiglitz, 1977.
"Bargains and Ripoffs: A Model of Monopolistically Competitive Price Dispersion,"
Review of Economic Studies,
Oxford University Press, vol. 44(3), pages 493-510.
- Steven C. Salop & Joseph E. Stiglitz, 1977. "Bargains and ripoffs: a model of monopolistically competitive price dispersion," Special Studies Papers 94, Board of Governors of the Federal Reserve System (U.S.).
- Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- von Weizsacker, Carl Christian, 1971. "Notes on endogenous change of tastes," Journal of Economic Theory, Elsevier, vol. 3(4), pages 345-372, December.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 659-679.
- Bruce C. Greenwald & Joseph E. Stiglitz, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 229-264.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 25-44, Spring.
- Ordover, Janusz A. & Shapiro, Carl, 1984. "Advances in supervision technology and economic welfare: a general equilibrium analysis," Journal of Public Economics, Elsevier, vol. 25(3), pages 371-389, December.
- Ordover, Janusz A. & Shapiro, Carl, 1983. "Advances in Supervision Technology and Economic Welfare: A General Equilibrium Analysis," Working Papers 83-18, C.V. Starr Center for Applied Economics, New York University.