Perfectly Imperfect

Source: EconLog
by Kevin Corcoran

“It’s said that one man’s trash is another man’s treasure. In the same way, one man’s market imperfection is another man’s market opportunity. Imperfections in markets don’t prevent markets from operating — they are a driving force of the market process. As Hayek once said, in the standard economics model of ‘perfect competition,’ there is no actual competition! … Markets are not about reaching and maintaining an equilibrium, free from frictions or imperfections. Markets are an ever-ongoing process, working in response to those frictions and imperfections.” (09/07/22)