Source: EconLog
by Kevin Corcoran
“Transaction costs, imperfect information, or sticky prices are sometimes characterized as ‘frictions’ that impede the market. Hence why in the model of perfect competition, there is a complete absence of economic frictions of any kind. Perfectly competitive, frictionless markets are thus held up as an ideal, and to the extent that real-work markets fall short of this ideal, markets have failed and are at least in principle open to government correction. But important scholars in the Austrian tradition have resisted this way of thinking.” (10/22/24)