The Institutional Economics

Docs en anglais | 5 pages | 29-04-2006 | Format : | Note : Non noté

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Résumé

'Mainstream economics devotes too much time discussing how markets work and insufficient to considering how they evolve'. (North, 1994). This statement is critically assessed. Word count: 1,564.

Extract:

The neoclassical model, usually known as the mainstream economics, is based on the homo-eoconomicus who makes individual and rational decisions in order to maximize his welfare as a function of his preferences. According to Dieter Zimbaeur (2001), the neoclassical model is a formal representation of the "working of the market". Under certain assumptions (perfect information, rationality of the actors, individualism and given preferences), one can define the market mechanism in the neoclassical theory as a "suitable allocative arrangement, in order to achieve pareto-efficiency." This model argues that competition, acting through a system of prices, would do all necessary coordination ...

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