• Markets are fully connected networks (NetworksAndMarketFailure)
  • People always make fair bargains. (The rational is simple. Surely no-one would rationally make a bargain where they lost out. Therefore, they don't. But of course :

** people are not necessarily rational

** people are not necessarily well informed (another kind of market failure)

** people's freedom to enter into bargains is constrained by

*** necessity (due to market failure no one is offering a fair bargain)

*** NetworkExternalities

[Speculative http://www.firstmonday.org/issues/issue5_2/delong/index.html Speculative Microeconomics for Tomorrow's Economy] by BradDeLong and A. Michael Froomkin

The case for the market system has always rested on three implicit pillars, three features of the way that property rights and exchange worked:

  • Call the first feature excludability: the ability of sellers to force consumers to become buyers, and thus to pay for whatever goods and services they use.
  • Call the second feature rivalry: a structure of costs in which two cannot partake as cheaply as one, in which producing enough for two million people to use will cost at least twice as many of society's resources as producing enough for one million people to use.
  • Call the third feature transparency: the ability of individuals to see clearly what they need and what is for sale, so that they truly know just what they wish to buy.

ZbigniewLukasiak

CategoryEconomics, CategoryPolitics