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Is Competition Necessarily Efficient? An Answer through the History of Neoclassical Theory

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  • Irène Berthonnet

Abstract

The paper challenges the idea that neoclassical economics has demonstrated competition’s efficiency. It does so by retracing the history of Pareto’s criterion (in general equilibrium and in modern neoclassical economics), showing that it is only after a few shifts and transformations that it became an “efficiency†criterion while it was never called that in Pareto’s work. Widespread belief that competition is efficient is rather the result of ideology than of rigorous neoclassical demonstration. JEL Classification: B13, B21, P16

Suggested Citation

  • Irène Berthonnet, 2019. "Is Competition Necessarily Efficient? An Answer through the History of Neoclassical Theory," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(2), pages 211-224, June.
    • Handle: RePEc:sae:reorpe:v:51:y:2019:i:2:p:211-224
    DOI: 10.1177/0486613418764038
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    References listed on IDEAS

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    1. Sonnenschein, Hugo, 1972. "Market Excess Demand Functions," Econometrica, Econometric Society, vol. 40(3), pages 549-563, May.
    2. Mantel, Rolf R., 1974. "On the characterization of aggregate excess demand," Journal of Economic Theory, Elsevier, vol. 7(3), pages 348-353, March.
    3. Joseph E. Stiglitz, 2002. "Information and the Change in the Paradigm in Economics," American Economic Review, American Economic Association, vol. 92(3), pages 460-501, June.
    4. Roberto Marchionatti, 2006. "At the origin of post-war mainstream of economics: On pareto’s influence on economic theory," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(4), pages 538-559, December.
    5. Philippe Steiner, 1995. "Vilfredo Pareto et le protectionnisme : l'économie politique appliquée, la sociologie générale et quelques paradoxes," Revue Économique, Programme National Persée, vol. 46(5), pages 1241-1262.
    6. Sonnenschein, Hugo, 1973. "Do Walras' identity and continuity characterize the class of community excess demand functions?," Journal of Economic Theory, Elsevier, vol. 6(4), pages 345-354, August.
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    Cited by:

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    More about this item

    Keywords

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    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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