Building Theories of Economic Process
Building Theories of Economic Process
In the previous chapters we have provided proofs of principle for representing institutions as the carriers of process , using strategic market game models highly related in form to those of general equilibrium, but with extra constraints imposed by the institutions sufficient to carry process. Nevertheless, except in Chapter 6 we have avoided explicit treatment of dynamics. Structure may limit, but does not fully specify enough to identify equations without further consideration of intent and behavior. In this chapter we turn explicitly to the problem of constraining dynamics. We begin by considering in varying degrees of brevity the modeling of a few special structures, chosen to meet the criteria that they supply a time path out of equilibrium to a stationary state as well as the proof of existence of a stationary state or growth path. In economics the unifying power of general equilibrium analysis comes from the fact that it is not a model, but rather a collection of principles for building models. This extends to our strategic models in this work.
Keywords: Disequilibrium, time path, ownership, control, coordination, contracts
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