Wednesday, December 31, 2008

Is this true?

...[A]ccording to standard microeconomic theory, unless an industry is dominated by tiny firms with small production capacity and all goods sold in that market are exactly the same, there exists a market failure. That is right; according to the economics canon, any product differentiation is “proof” that the market has failed, and only can be set right by outside (read that, government) action.

In the real world, competition is defined by heterogeneity; people seek to demonstrate that their products are better than others, that there is a quality difference. Academic economists, however, hold that such differences demonstrate that markets are less competitive than what is socially optimal. (Joan Robinson, a student of Alfred Marshall and a developer of “imperfect competition” theory, wrote that such differences provided a “spatial monopoly” to producers and should be regulated by government.) Nor do they have a workable theory of capital, and they ignore the role of time and time preference.

That's from William Anderson, “Free Market” Economists and Economic Ignorance.

Are these people retarded?

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