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Various concepts of equilibrium in economics

In: The New Economics of Income Distribution

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In a decentralized economy, plans of the involved agents can be coordinated either by the market process – that is, by adjustable prices and the flexible response of demand and supply – or by the contract seeking forces driven by bargaining agents or by the voting power of the electorate. ‘Various concepts of equilibrium in economics’, we put forward the idea that market, contractual and political economy outcomes are rather a by-product of the distributional contest, which is in the background of all economic actions. This view disagrees with the traditional conviction that income distribution is a sort of by-product of market processes, bargaining situations or elections. The chapter illustrates all three channels for the income distribution contest by taking the example of bandwagon and snob effects in the goods market equilibrium, the efficient exchange of goods between households in the bargaining framework and the rational partisan business cycle, which can explain equilibrium values for unemployment and the inflation (rate).

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  • ., 2015. "Various concepts of equilibrium in economics," Chapters, in: The New Economics of Income Distribution, chapter 2, pages 25-37, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:15663_2
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    Cited by:

    1. van der Ploeg, Frederick, 2016. "Second-best carbon taxation in the global economy: The Green Paradox and carbon leakage revisited," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 85-105.
    2. Ahmed Shoukry Rashad & Mesbah Fathy Sharaf, 2015. "Catastrophic Economic Consequences of Healthcare Payments: Effects on Poverty Estimates in Egypt, Jordan, and Palestine," Economies, MDPI, vol. 3(4), pages 1-19, November.

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    Economics and Finance;

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