Price-Value Potential for Near-Perfectly Competitive Markets
Sergey K. Aityan
American Journal of Economics and Business Administration
DOI: 10.3844/ajebasp.2011.623.635
Volume 3, Issue 4
Pages 623-635
This study introduces price-value potential to be used instead of price for market analysis by analogy with free energy or thermodynamic potential in physics. A conservation principle is proposed for price-value potential. It is shown that price-value potential provides a constructive way for market analysis by identifying variation of equilibrium prices and quantities for different products in market equilibrium. A perturbation theory for a group of products with small differentiations on near-perfectly competitive markets was developed for illustration of the approach. The concept of price-value potential is illustrated in a simple example of a near-perfectly competitive market. It is shown that the equilibrium prices and quantities for products differ due to product differentiation that makes such an approach a constructive enhancement to the classical model of perfect competition.
Aityan, S.K., 2011. Price-value potential for near-perfectly competitive markets. Am. J. Economics Business Administration, 3: 623-635.
DOI: 10.3844/ajebasp.2011.623.635
URL: http://thescipub.com/abstract/10.3844/ajebasp.2011.623.635