A Fundamental Reformation of Neoclassical Economics
45 Pages Posted: 15 Jun 2020
Date Written: June 9, 2020
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, behavioral-empirical-experimental economics, neuroeconomics, heterodox economics, etc. This was due to serious shortcomings and mistakes of the traditional theory that is based on Neoclassical economics. The correction of those mistakes entails dramatic changes in the Neoclassical theory and its fundamental outcomes, concerning perfect competition, price determination, value theory, income distribution, 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. Moreover, by this reformation, 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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