Some Basic Problems of Research into Competition in Agricultural Markets

Excerpts from the paper: Equilibrium theory has come under heavy attack for its lack of realism (e.g. Kaldor, Morgenstern, Robinson 1976, 1977). Yet, economists continue to use it on the grounds that it is the best theory available, implying that it yields testable implications (e.g. Furubotn and Pejovich). I propose to make a modest contribution to this 'debate' by lending support to both sides. Looking at primary agricultural markets, I will argue through most of this paper that the usefulness of partial equilibrium theory can be improved by incorporating 'time' in a more fruitful way. But later, I will argue that for some big problems of society, we must search for a theory of disequilibrium to guide inquiry. I hasten to add that there is nothing new in this stance, although I will try to shed some fresh light on the matter. The following discussion is divided into six topics entitled price structure and time; price discovery and market tatonnement; market form and price competition; market boundaries; dynamics of the firm and the market; and concluding remarks.