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From General Equilibrium to Schumpeter

Listed author(s):
  • Shubik, Martin
  • Sudderth, William D.

A simple model of cost innovation in a monetary economy is presented that illustrates the essentially dynamic model of Schumpeter involving breaking the circular flow of capital is logically consistent with the General Equilibrium (GE) model of an exchange and production economy. The GE model as presented by Arrow, Debreu and McKenzie is a non-process model; and the original theory deals with the non-constructive proofs of existence of competitive equilibria (CEs). To associate this theory with GE it is necessary to recast the basic model as a process model. The GE model is enlarged and specified as a playable game by adding rules to describe the mechanisms that carry process.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165188915001578
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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 61 (2015)
Issue (Month): C ()
Pages: 269-282

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Handle: RePEc:eee:dyncon:v:61:y:2015:i:c:p:269-282
DOI: 10.1016/j.jedc.2015.08.009
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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  2. Huber, Juergen & Shubik, Martin & Sunder, Shyam, 2010. "Three minimal market institutions with human and algorithmic agents: Theory and experimental evidence," Games and Economic Behavior, Elsevier, vol. 70(2), pages 403-424, November.
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