Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110009
Authors: 
Pilkington, Philip
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Levy Economics Institute 781
Abstract: 
The paper seeks to lay out a stock-flow-based theoretical framework that provides a foundation for a general theory of pricing. Contemporary marginalist economics is usually based on the assumption that prices are set in line with the value placed on goods by consumers. It does not take into account expectations, or the fact that real goods are often simultaneously assets. Meanwhile, contemporary theories of asset markets are flawed in that they either rely, implicitly or explicitly, on a market equilibrium framework or provide no framework at all. This paper offers a working alternative that relies, not on a market equilibrium framework, but rather on a stock-flow equilibrium framework. In doing so, we lay out a properly general theory of pricing that can be applied to any market - whether financial, real, or a real market that has been financialized - and which does not require that prices inevitably tend toward some prespecified market equilibrium.
Subjects: 
Pricing
Prices
Asset Pricing
Assets
Financial Assets
Financial Pricing
Disequilibrium Pricing
Equilibrium
Disequilibrium
Market Structure
Teleology
JEL: 
B4
D4
D5
D8
E3
E4
G1
Document Type: 
Working Paper

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