Models of Markets

Models of Markets

Models of Markets

Models of Markets

Excerpt

This volume contains the papers and formal discussion presented at two conferences sponsored by the Graduate School of Business, Columbia University, under a financial grant from the Sperry and Hutchinson Company. These conferences and this volume were designed to serve as an inventory and situation report on the state of economists' knowledge about markets and competition.

The past twenty years have seen increasing use of formal models as analytical tools, in economics, as in other spheres. For example, the growing field of econometrics has made extensive use of mathematical models of economic relationships, especially those involved in the functioning of the economy as a whole. Operations research has applied formal models to the successful solution of a wide variety of decision problems in the management of business and government.

While this model-building activity has progressed and has received increasing recognition and approval, the much older economic models of markets have had no such progressive development and have received no such recognition and approval. This is not because of lack of apparent importance or lack of widespread knowledge about them. The subject matter of these models is clearly important, for they attempt to explain the behavior of business firms and entire industries. Furthermore, generations of economics students have been instructed faithfully in their properties. Yet a general feeling of dissatisfaction exists. Even though the market models concern some of business's most important decision problems, businessmen seem largely to ignore them. Even though they relate to fundamental issues in industry structure and behavior, only limited areas of antitrust policy and enforcement appear to make . . .

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