In this carefully articulated investigation of the Walrasian general equilibrium model, the author sets forth one perception or explanation of how the microeconomy might operate. The focus is primarily on the behavior of individual consumers, firms and markets under perfectly competitive conditions and on the simultaneous interactions that occur among them. Central to his argument is that all of these elements fit together to form a unified whole for a complete, consistent, and cohesive picture of the perfectly competitive microeconomy.
The book provides substantial discussion of the model’s methodological background; returns to scale; the transformation surface and the fixed-factor-supply economy; existence, uniqueness, and stability of equilibria; the dynamics of market adjustments; methodological individualism and the theory of price determination; imperfectly competitive markets; welfare economics; and the role of money capital in the operation of the firm. The author suggests that the abandonment of general equilibrium theory by microeconomists is a mistake, and that it is too soon to give up on the possibility of constructing an adequate analysis of uniqueness, global stability, and price determination.
Students and scholars of economics will find much of interest in this thorough exploration of the operation of the microeconomy.