Market Theory and the Price System

 Market Theory and the Price System

 

About this Title:

The second volume in Liberty Fund’s The Collected Works of Israel M. Kirzner series, Market Theory and the Price System was published in 1963 as Kirzner’s first (and only) textbook. This volume presents an integrated view of Austrian price theory. The basic aim of Market Theory is to utilize the tools of economic reasoning to explain the market process. The unique framework Kirzner develops for microeconomic analysis, following Mises and Hayek, examines errors in decision-making, entrepreneurial profit, and competition as a process of discovery and learning.

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The copyright to this edition, in both print and electronic forms, is held by Liberty Fund, Inc.

Fair use statement:

This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.

Table of Contents:

• THE COLLECTED WORKS OF ISRAEL M. KIRZNER
• CONTENTS
• INTRODUCTION TO THE LIBERTY FUND EDITION
• ACKNOWLEDGMENTS
• BIBLIOGRAPHY OF WORKS CITED IN THE INTRODUCTION
• PREFACE
• MARKET THEORY AND THE PRICE SYSTEM
• 1: THE NATURE AND TASKS OF MARKET THEORY
• THE INDIVIDUAL AND THE MARKET
• THE MARKET SYSTEM
• THE FOUNDATIONS OF MARKET THEORY
• THE INDIVIDUAL AND ECONOMIC BEHAVIOR
• ECONOMIC THEORY AND ECONOMIC REALITY
• MARKET THEORY, ECONOMIC THEORY, AND ECONOMICS
• SUMMARY
• SUGGESTED READINGS
• 2: THE MARKET: ITS STRUCTURE AND OPERATION
• THE CONDITIONS UNDER WHICH THE MARKET OPERATES
• MARKET ROLES
• THE STRUCTURE OF THE MARKET SYSTEM: VERTICAL RELATIONSHIPS
• THE STRUCTURE OF THE MARKET SYSTEM: HORIZONTAL RELATIONSHIPS
• THE ANALYSIS OF HUMAN ACTION IN THE MARKET: THE CONCEPT OF EQUILIBRIUM
• COMPLETE AND INCOMPLETE EQUILIBRIUM
• THE PATTERN OF MARKET ADJUSTMENT
• THE CHANGING MARKET
• THE MARKET SYSTEM AS A WHOLE
• SUMMARY
• SUGGESTED READINGS
• 3: EFFICIENCY, COORDINATION, AND THE MARKET ECONOMY
• THE ECONOMIC PROBLEM
• SOCIETY AND THE ECONOMIC PROBLEM
• THE PROBLEM OF COORDINATION
• HOW THE MARKET SOLVES THE PROBLEMS OF COORDINATION
• THE COORDINATING FUNCTION OF PROFITS IN A MARKET ECONOMY
• SUMMARY
• SUGGESTED READINGS
• 4: UTILITY THEORY
• THE SCALE OF VALUES
• MARGINAL UTILITY
• DIMINISHING MARGINAL UTILITY
• THE MARGINAL UTILITIES OF RELATED GOODS
• MARGINAL UTILITY—SOME FURTHER REMARKS
• The Paradox of Value
• The Subjective Character of Utility
• Utility as a Relative Concept
• The Ordinal Character of Utility
• Total Utility and Marginal Utility
• MARGINAL UTILITY AND THE CONDITIONS FOR EXCHANGE
• SUMMARY
• SUGGESTED READINGS
• 5: CONSUMER INCOME ALLOCATION
• MARGINAL UTILITY AND THE ALLOCATION OF INCOME
• THE POSITION OF CONSUMER’S EQUILIBRIUM
• A GEOMETRICAL ILLUSTRATION
• THE EFFECTS OF CHANGES
• 1.: Change of Tastes
• 2.: Change of Income
• 3.: Change of Prices
• Price Change for a Single Good
• THE INDIVIDUAL DEMAND CURVE
• SOME REMARKS ON EXPECTATIONS
• SUMMARY
• SUGGESTED READINGS
• 6: MARKET DEMAND
• MARKET DEMAND
• THE MARKET DEMAND CURVE
• DEMAND ELASTICITY
• MEASURES OF ELASTICITY
• MARKET DEMAND AS SEEN BY THE INDIVIDUAL ENTREPRENEUR
• DEMAND AND REVENUE
• DEMAND AND THE PRICES OF OTHER GOODS
• DEMAND AS A MARKET FORCE
• SUMMARY
• SUGGESTED READINGS
• 7: MARKET PROCESS IN A PURE EXCHANGE ECONOMY
• THE NATURE OF COMPETITION
• A SIMPLE CASE OF PRICE COMPETITION
• SIMPLE PRICE COMPETITION WITHOUT PERFECT KNOWLEDGE
• THE MARKET FOR SEVERAL NON-PRODUCIBLE GOODS: THE PROBLEM
• THE EQUILIBRIUM SITUATION FOR THE MULTI-COMMODITY MARKET
• THE MULTI-COMMODITY MARKET WITHOUT PERFECT KNOWLEDGE
• MONOPOLY IN A PURE EXCHANGE MARKET
• THE AGITATION OF THE MARKET
• SUMMARY
• SUGGESTED READINGS
• APPENDIX
• 8: PRODUCTION THEORY
• THE ECONOMIC ASPECT OF PRODUCTION
• PRODUCTION BY THE ISOLATED INDIVIDUAL
• PRODUCTION IN SOCIETY
• PRODUCTION IN THE MARKET ECONOMY
• FACTORS OF PRODUCTION
• PRODUCTION FUNCTIONS AND ISOQUANTS
• THE SHAPE OF THE ISOQUANT AND THE SUBSTITUTABILITY OF FACTORS
• CHANGES IN FACTOR PROPORTIONS, AND CHANGES IN THE SCALE OF FACTOR EMPLOYMENT
• RETURNS TO SCALE
• THE LAWS OF VARIABLE PROPORTIONS: THE PROBLEM
• THE LAWS OF VARIABLE PROPORTIONS
• ECONOMIC IMPLICATIONS OF THE LAWS OF VARIABLE PROPORTIONS
• THE LEAST-COST COMBINATION
• GRAPHIC ILLUSTRATION OF THE LEAST-COST COMBINATION
• SUMMARY
• SUGGESTED READINGS
• 9: COSTS AND SUPPLY
• COSTS AND RENTS
• OPPORTUNITY COSTS AND SUPPLY THEORY
• PROSPECTIVE AND RETROSPECTIVE COSTS
• CAPITAL GOODS AND COST THEORY
• FACTOR DIVISIBILITY AND SHORT-RUN PER-UNIT COSTS
• SHORT-RUN COSTS AND THEIR EFFECT ON SUPPLY
• LONG-RUN COSTS AND SUPPLY
• FACTOR PRICES AND SUPPLY
• SUMMARY
• SUGGESTED READINGS
• 10: PARTIAL MARKET PROCESSES—THE DETERMINATION OF PRODUCT PRICES AND FACTOR PRICES
• THE MARKET FOR A SINGLE PRODUCT
• LONG-RUN EQUILIBRIUM
• SHORT-RUN EQUILIBRIUM IN THE SINGLE-PRODUCT MARKET
• EQUILIBRIUM IN THE SINGLE-PRODUCT MARKET IN THE VERY SHORT RUN
• ADJUSTMENT TO CHANGE IN A MARKET FOR A SINGLE PRODUCT
• THE MARKET PROCESS IN A MARKET FOR A SINGLE PRODUCT
• THE MARKET FOR A SINGLE FACTOR OF PRODUCTION
• EQUILIBRIUM IN A FACTOR MARKET
• THE MARKET PROCESS IN A MARKET FOR A SINGLE FACTOR OF PRODUCTION
• TOWARD THE GENERAL MARKET PROCESS
• SUMMARY
• SUGGESTED READINGS
• 11: THE GENERAL MARKET PROCESS
• A PRELIMINARY MODEL
• THE PRELIMINARY MODEL AND THE GENERAL MODEL
• GENERAL MARKET EQUILIBRIUM CONDITIONS
• A GENERAL MARKET IN DISEQUILIBRIUM
• DISEQUILIBRIUM IN THE GENERAL MARKET AND ENTREPRENEURIAL OPPORTUNITIES
• ENTREPRENEURIAL ACTIVITY AND THE GENERAL MARKET PROCESS
• PARTIAL ANALYSIS AND THE ANALYSIS OF A GENERAL MARKET
• TOWARD FURTHER EXTENSIONS OF THE GENERAL MARKET MODEL
• SUMMARY
• SUGGESTED READINGS
• 12: MONOPOLY AND COMPETITION IN THE GENERAL MARKET
• THE MONOPOLIZED RESOURCE
• THE RESOURCE CARTEL
• RESTRICTION OF SUPPLY: A SPECIAL CASE
• COMBINATIONS OF RESOURCE BUYERS
• MONOPOLY IN PRODUCTION
• THE CONSEQUENCES OF MONOPOLY OUTPUT RESTRICTION
• THE MONOPOLIST-PRODUCER AS A RESOURCE BUYER
• FURTHER REMARKS ON MONOPOLIZED PRODUCTS
• THE SINGLE PRODUCER WITHOUT MONOPOLY
• SOME REMARKS ON THE MODEL OF “PURE” OR “PERFECT” COMPETITION
• MONOPOLISTIC PRICE DISCRIMINATION
• SUMMARY
• SUGGESTED READINGS
• 13: THE PRICE SYSTEM AND THE ALLOCATION OF RESOURCES
• THE POSSIBLE LEVELS OF “WELFARE” APPRAISAL
• MISALLOCATION OF A RESOURCE IN A MARKET SYSTEM
• IMPERFECT KNOWLEDGE, THE SOURCE OF RESOURCE MISALLOCATION
• PRICES, PROFITS, AND THE REALLOCATION OF RESOURCES
• THE ENTREPRENEUR AND RESOURCE ALLOCATION
• RESOURCE MOBILITY AND THE ALLOCATION PATTERN
• MONOPOLY AS AN OBSTACLE TO CORRECT RESOURCE ALLOCATION
• ARTIFICIAL OBSTACLES TO CORRECT RESOURCE ALLOCATION
• SUMMARY
• SUGGESTED READINGS
• Appendix:: THE APPLICATION OF MARKET THEORY TO MULTI-PERIOD PLANNING
• MULTI-PERIOD DECISIONS IN THE PURE EXCHANGE ECONOMY
• THE INTERTEMPORAL MARKET
• SPECULATION AS AN ASPECT OF INTERTEMPORAL MARKETS
• MULTI-PERIOD DECISIONS OF PRODUCERS
• THE PLACE OF CAPITAL GOODS IN PRODUCTION
• SUGGESTED READINGS