A Revision of the Theory of Perfect Competition and of Value
58 Pages Posted: 25 Nov 2016 Last revised: 23 Jul 2021
Date Written: November 25, 2016
During the second half of the twentieth century economic theory moved increasingly away from price theory, which was gradually displaced by more modern trends such as game theory, decision theory, behavioral-empirical-experimental economics, heterodox economics, etc. This was due to serious weaknesses and mistakes of the traditional theory of perfect competition and of value. The correction of those mistakes entails dramatic changes in the classic theory's fundamental outcomes concerning perfect competition, price determination, social welfare, and other major fields of economics. This also results in an integrated theory in which market functions, regardless of the number of firms, i.e. from monopoly to perfect competition. But, most importantly, by this revision traditional price theory regains its self-efficiency, prestige, and dominant position in economics.
Keywords: individual demand curves for the firms, price determination, equilibrium at firm and at market level, aggregate industry profit maximization, monopolistic nature of perfect competition, social welfare, revision of the mainstream theory
JEL Classification: B12, B13, B21, D21, D41, D42, D43, D46, D50, D60, E10, E13, E30
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