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Empirical rejection of mainstream economics' core postulates -on prices, firms' profits and markets structure

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  • Vergés-Jaime, Joaquim

Abstract

Mainstream economics relies largely on deductive assumptions –not resulting from a systematic gathering of observations. Among them, those assumptions on prices determination by firms, firms’ size relative to market demand, and the prevailing market structure regarding the competition/monopoly axis. The present paper is devoted to presenting the results of confronting these assumptions with the extensive empirical evidence about. As a result it is argued here that these core assumptions cannot actually be sustained; hence, the economics’ standard model built upon them is not a useful theory to explain the workings of market economies, teach economics at class rooms, etc.

Suggested Citation

  • Vergés-Jaime, Joaquim, 2020. "Empirical rejection of mainstream economics' core postulates -on prices, firms' profits and markets structure," MPRA Paper 115060, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115060
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    References listed on IDEAS

    as
    1. Mark Blaug, 1998. "Disturbing Currents in Modern Economics," Challenge, Taylor & Francis Journals, vol. 41(3), pages 11-34, May.
    2. Bruce Lyons & Catherine Matraves & Peter Moffatt, 2001. "Industrial Concentration and Market Integration in the European Union," Economica, London School of Economics and Political Science, vol. 68(269), pages 1-26, February.
    3. Morgenstern, Oskar, 1972. "Thirteen Critical Points in Contemporary Economic Theory: An Interpretation," Journal of Economic Literature, American Economic Association, vol. 10(4), pages 1163-1189, December.
    4. Traina, James, 2018. "Is Aggregate Market Power Increasing? Production Trends Using Financial Statements," Working Papers 272, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
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    More about this item

    Keywords

    Mainstream economics' assumptions; Firms' pricing; Empirical evidence on firms' profits; Empirical evidence on market structures;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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