Re: Why study general equilibrium models of perfect competition?
- From: royls@xxxxxxxxx
- Date: Mon, 29 Aug 2005 02:00:52 GMT
On 23 Aug 2005 15:50:53 -0700, "ruetheday@xxxxxxxxxx"
<ruetheday@xxxxxxxxxx> wrote:
>Given that the core of modern microeconomics consists primarily of GE
>models of perfect competition, and that these models do not even
>vaguely resemble any markets that exist in reality, what is the
>objective for studying them? The typical answer is that they represent
>some sort of flawless (if unobtainable) ideal and that by studying the
>attributes of the model and the effect of real world deviations from
>this ideal, we can understand what effect further deviations will have.
> Is this a valid approach though? Or would it be more useful to focus
>from the start on models that more accurately reflect reality (e.g.,
>dynamic vs static equilibrium models and models of monopolistic
>competition and oligopoly vs models of perfect competition)? Are GE PC
>models really the starting point against which to judge all other
>models or are they just another model no more relevant than any other?
GE PC models are garbage, no more related to economic reality than
phlogiston was related to chemical reality. Economics students are
required to study them so that they won't have the time or energy to
think about real economic issues like rent.
-- Roy L
.
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- Why study general equilibrium models of perfect competition?
- From: ruetheday@xxxxxxxxxx
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