The Theory and the Facts of How Markets Clear: Is Industrial Organization Valuable for Understanding Macroeconomics? / Dennis W. Carlton.

Format:

Book

Author/Creator:

Carlton, Dennis W.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2178.

NBER working paper series no. w2178

Language:

English

Subjects (All):

ndustrial organization (Economic theory).

Supply and demand.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Theory and the Facts of How Markets Clear

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Cambridge, Massachusetts : National Bureau of Economic Research, 1987.

Summary:

This paper examines what industrial organization economists know and don't know about how markets clear. It reviews the empirical evidence which shows that, at least for some industries, price behavior is peculiar with prices failing to adjust over long periods of time. The paper discusses several existing theoretical explanations for the peculiar behavior such as fixed cost to changing price information asymmetries and theories of dynamic oligopoly. The paper goes on to develop some new theories to explain the observed behavior. The new explanations rely heavily on the importance of a seller's knowledge of his customers and on the optimality of non-price rationing. The paper discusses what relation, if anything, macroeconomics has to industrial organization.

Notes:

Print version record

March 1987.