Volume 3, Issue 1, February 2014, Page: 9-18
The Theory of Time, Information and Money in a Competitive Market
Percival S. Gabriel, Faculty of History and International Studies, University of the East, 2219 C. M. Recto Ave., Manila, Philippines
Received: Apr. 29, 2014;       Accepted: May 21, 2014;       Published: Jun. 10, 2014
DOI: 10.11648/j.eco.20140301.12      View  2603      Downloads  102
Abstract
The aim of this paper is to introduce a theory of competition that incorporates three variables namely the prices of the commodities, the cost of switching to competitive products, the time it takes to switch to competitive products and the amount of information available that would cause consumers to make the switch. The argument of this paper is that, simple plurality of producers and sellers in the market does not make for competition. Even if many producers or sellers selling homogenous products are operating in the market, competition would still be non-existent if buyers would not have equal access to the competing products that they sell. Equal access would permit each competing product to be equally selected if not bought. Normally, a perfectly working competitive market would indicate that all available products in the market would have equal probabilities of getting selected. That is, products would have a probability of 1/n each. With this assumption, the other aim of this paper is to combine the three variables into a single coefficient and since it is assumed that the prices of commodities, cost of switching, convenience to switch as indicated by the time and the amount of information available at the time of switching can affect the chances of commodities’ selection, then the coefficient can be multiplied with their probabilities to indicate the decrease or increase in the chances of their selection. The last aim of the paper is to combine all these probabilities in order to measure the degree of competition.
Keywords
Infrastructure for Competition, Price-Cost Ratio, Time Ratio, Information Ratio, Selection Coefficient, Competition Index, Adjusted Probability, Unified Line
To cite this article
Percival S. Gabriel, The Theory of Time, Information and Money in a Competitive Market, Economics. Vol. 3, No. 1, 2014, pp. 9-18. doi: 10.11648/j.eco.20140301.12
Reference
[1]
B. Sandelin, H.M. Trautwein, and R. Wundrak, A Short History of Economic Thought 2nd ed. New York: Routledge, 2008, p. 55.
[2]
C.B. Eaton, D.F. Eaton, and D.W. Allen, The Theory of Perfect Competition, Pearson Microeconomics, (http://wps.prenhall.com/ca_ph_eaton_microecon_6/22/5851/1497893.cw/index.html).
[3]
P. Samuelson and W. Nordhaus. Economics, 19th edition, New York: McGraw Hill, 2010, p.189.
[4]
M.A. Copeland, The Theory of Monopolistic Competition. Journal of Political Economy, vol. 42, no. 4, pp. 531-536, August 1934.
[5]
G.N. Mankiw, Principles of Economics. New York: The Dryden Press, 1998, pp. 288-290.
[6]
A. Thompson Economics of the Firm: Theory and Practice, 5th edition, New York: McGraw Hill, 1985, p. 304.
Browse journals by subject