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Double Competition and Market Stability in Sir James Steuart

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  • José M. Menudo

    () (Department of Economics, Universidad Pablo de Olavide)

  • Ramón Tortajada

    () (Department of Economics, Université Pierre Mendès France)

Abstract

In this work we deal with the theory of price determination in Steuart’s writings; in particular with the concept of Double competition. The background is the evolution of the concept of market during the 18th century. Steuart proposed a theoretical construction in order to tackle the problem of price stability. The first part of the paper presents the method proposed by the authors in order to analyse the price formation in Steuart. We are going to propose a static approach made of periods. The second part develops the explanation of Steuart’s theoretical schema. Price determination is a breakdown process inside a monetary circulation system that ensures the transaction between agents, i.e. the market. Exchange mechanism occurs on a two-fold basis: among merchants and producers and then among consumers and merchants. However, every period is connected so that price fluctuation becomes a new economic problem. The two final sections of the paper are dedicated to the required external regulation. If market is unstable, merchants do not know how to bring this stability about. Maintaining a stable price depends on an authority outside the market. Steuart propose the way towards a smooth price vibration where State and stability are inseparable.

Suggested Citation

  • José M. Menudo & Ramón Tortajada, 2009. "Double Competition and Market Stability in Sir James Steuart," Working Papers 09.06, Universidad Pablo de Olavide, Department of Economics.
  • Handle: RePEc:pab:wpaper:09.06
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    File URL: http://www.upo.es/serv/bib/wps/econ0906.pdf
    File Function: First version, 2009
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    References listed on IDEAS

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    More about this item

    Keywords

    James Steuart; Equilibrium and Disequilibrium; Price formation; Information and Knowledge;

    JEL classification:

    • B11 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Preclassical (Ancient, Medieval, Mercantilist, Physiocratic)
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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