Imperfect Competition and Price Stability in General Equilibrium

这个项目解决了一般均衡理论中的两个主要缺陷：对垄断竞争的全面处理和对价格趋同于其均衡值的解释。这些都是经济理论中尚未解决的基本问题。这个项目的见解应该会改善经济理论家用来研究市场表现的基本范式。不完全竞争是通过将公司设为“适度小”来模拟的，尽管没有小到完全竞争的程度。“小”的定义应该是内生的，通过自由进入大市场，而不是假设企业的平均成本曲线在某一点后上升。价格由企业选择，但生产需要时间，因此竞争实际上是古诺式的。稳定性理论必须作为一个学习的过程来重新考虑。价格应该由企业做出理性决策形成。要做到这一点，必须认识到，在不均衡的情况下，卖方或买方都有市场支配力。有不完整的信息。每一轮都以个别公司的过剩供给或需求的形式产生一系列信号。由此，他们可以根据经济的未知参数更新先验。在下一轮中，他们选择在市场开放之前生产，并选择新的价格。由于这个过程是一个累积信息的过程（过去的信号仍然会进入当前的决策），标准稳定性理论的失败可能不会阻止收敛中更好的结果。

This project addresses two major gaps in general equilibrium theory: a full treatment of monopolistic competition and an explanation of the convergence of prices towards their equilibrium values. These are fundamental and as yet unresolved problems in economic theory. The insights from this project should improve the basic paradigm used by economic theorists to study market performance. Imperfect competition is modelled by taking firms to be "moderately small," although not so small the situation is essentially perfectly competitive. "Smallness" should be defined endogenously, by free entry in large markets, not by assuming that firms having rising average cost curves after a point. Prices are chosen by firms, but production requires time so that the competition is effectively Cournot-like. Stability theory has to be reconsidered as a learning process. Prices should be formed by firms making rational decisions. This is made possible by recognizing that out of equilibrium either sellers or buyers have market power. There is incomplete information. Each round yields a set of signals in the form of excess supplies or demands for individual firms. From this they can update their priors on the unknown parameters of the economy. In the next round, they choose production before the market opens and also choose new prices. Since the process is one of cumulative information (past signals still enter into present decisions), the failure of standard stability theory may not prevent better results in convergence.