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This chapter will contain a more detailed assessment of the model of perfect competition. We shall start by considering the necessary (and sufficient) assumptions of the model, some of which are usually explicit while others are only implicit. We shall then proceed to appraise the model under three headings: the realism of its assumptions; its logical structure; and the verification of its predictions.
KeywordsProduction Possibility Imperfect Competition Perfect Knowledge Perfect Competition Future Yield
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- 1.The classic exposition of this model is that of Leon Walras in his Elements of Pure Economics, English translation by William Jaffé (George Allen & Unwin, 1954).Google Scholar
- 2.Best explained in K. J. Arrow and F. H. Hahn, General Competitive Analysis (Holden-Day and Oliver and Boyd, 1971).Google Scholar