Maximizing, Action and Market Adjustment

The International Carl Menger Library

Nothing is more central to economics than price, and nothing is more characteristic of market prices than ferment and change. Yet modern economists have paid relatively little attention to the theory of price dynamics.

In this work the author explores price dynamics and advances the economic theory of price change, surveying stability analysis, search theory, and market process theory as developed by Ludwig von Mises, Friedrich August von Hayek, Israel Kirzner, Murray Rothbard, and other proponents of the "Austrian" School.

Then High undertakes an indepth analysis of search theory, including the foundations of probability upon which the theory of search is built. He argues that economists have overestimated the applicability of search theory, because they have conflated Bayesian inference and subjective probability. In the final chapter of the book, High develops some models of price adjustment in relatively non-technical language. These models are of considerable interest in their own right and also reveal the stringency of the assumptions required to obtain price convergence, even allowing for entrepreneurial activity.

This work should find its way into the curricula of graduate economics programs throughout the United States and Europe. The importance of the subject, the clarity of the exposition, and the cogency of the argument combine to give the book especial appeal to everyone concerned with the modern theory of price.

Source: text from inside cover of Jack High, Maximizing, Action, and Market Adjustment (1990)

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