Skip to main content
    • Aa
    • Aa

Price theory as prophylactic against popular fallacies


The articles collected in Chicago Price Theory illustrate elements of continuity and change in the development of the Chicago School of Economics. The editors stress a continuity in the Chicago tradition that runs from Frank Knight to Gary Becker. Our contribution in this essay is to emphasize the discontinuity in the evolution of the Chicago price theory tradition. We argue that a logical continuity runs not from the Knight/Viner/Simons generation to the Friedman/Stigler/Becker generation, but to a branch of the Chicago tradition best exemplified by the Alchian/Buchanan/Coase generation of Chicago price theory. The continuity we stress is understanding price theory as a study of market adjustment and adaptation under alternative institutional arrangements.

Corresponding author
Hide All

We thank the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at George Mason University for reading an earlier draft of this paper and offering very helpful comments, particularly Donald Boudreaux, Christopher Coyne, Peter Leeson, Patrick Newman, Solomon Stein, Virgil Storr, and Richard Wagner. We also thank Mario Rizzo, Israel Kirzner and the participants at the Colloquium on Market Institutions & Economic Processes at New York University as well as Shaun Hargreaves Heap, John Meadowcroft, Mark Pennington, and David and Emily Skarbek of the Department of Political Economy at King's College London for offering comments, criticisms, and helpful suggestions. We also gratefully acknowledge Brian Albrecht, Per Bylund, Bruce Caldwell, Randall Holcombe, Roger Koppl, Alain Marciano, Deirdre McCloskey, Steve Medema, Svetozar Pejovich, Benjamin Powell, Edward Stringham, and Glen Weyl for offering comments and criticisms. Any remaining errors are our own.

Hide All
AkerlofG. A. and Shiller R. J. (2015), Phishing for Phools: The Economics of Manipulation and Deception, Princeton: Princeton University Press.
AlchianA. A. (1950), ‘Uncertainty, Evolution, and Economic Theory’, Journal of Political Economy, 58 (3): 211221.
AlchianA. A. (1977), Economic Forces at Work, Indianapolis: Liberty Press.
AlchianA. A. and Allen W. R. (1964), University Economics, Belmont: Wadsworth Publishing Company.
BastiatF. (1996), Economic Sophisms, Irvington-on-Hudson: Foundation for Economic Education.
BatorF. M. (1957), ‘The Simple Analytics of Welfare Maximization’, The American Economic Review, 47 (1): 2259.
BeckerG. S. (1962), ‘Irrational Behavior and Economic Theory’, Journal of Political Economy, 70 (1): 113.
BeckerG. S. (1971), Economic Theory, New York: Alfred A. Knopf.
BoettkeP. J. (1997), ‘Where Did Economics Go Wrong? Modern Economics as a Flight from Reality’, Critical Review, 11 (1): 1164.
BoettkeP. J. (1998), ‘Economic Calculation: The Austrian Contribution to Political Economy’, Advances in Austrian Economics, 5: 131158.
BoettkeP. J. (2002), ‘Information and Knowledge: Austrian Economics in Search of its Uniqueness’, The Review of Austrian Economics, 15 (4): 263274.
BoettkeP. J. (2012), Living Economics: Yesterday, Today, and Tomorrow, Oakland: Independent Institute.
BoettkeP. J. and Candela R. A. (2014), ‘Alchian, Buchanan, and Coase: A Neglected Branch of Chicago Price Theory’, Man and the Economy, 1 (2): 189208.
BoettkeP. J. and Candela R. (2016), ‘Milton Friedman, James Buchanan, and Constitutional Political Economy’, in Cord R. A. and Hammond D. J. (eds.), Milton Friedman: Contributions to Economics and Public Policy, New York: Oxford University Press, pp. 727740.
BuchananJ. M. (1959), ‘Positive Economics, Welfare Economics, and Political Economy’, The Journal of Law and Economics, 2: 124138.
BuchananJ. M. (1964), ‘What Should Economists Do?’, Southern Economic Journal, 30 (3): 213222.
BuchananJ. M. (1999), The Collected Works of James M. Buchanan Volume 5, The Demand and Supply of Public Goods, Indianapolis: Liberty Fund.
BuchananJ. M. (2010), ‘Chicago School Thinking: Old and New’, unpublished Paper, Fairfax, VA, Center for Study of Public Choice, George Mason University.
BuchananJ. M. (2015), ‘Notes on Hayek – Miami, 15 February, 1979’, Review of Austrian Economics, 28 (3): 257260.
CoaseR. H. (1959), ‘The Federal Communications Commission’, The Journal of Law and Economics, 2: 140.
CoaseR. H. (1988), The Firm, The Market, and The Law, Chicago: University of Chicago Press.
CoaseR. H. (1992), ‘The Institutional Structure of Production’, The American Economic Review, 82 (4): 713719.
DemsetzH. (1968), ‘Why Regulate Utilities?’, Journal of Law and Economics, 11 (1): 5565.
FriedmanM. (1947), ‘Lerner on the Economics of Control’, Journal of Political Economy, 55 (5): 450–416.
FriedmanM. (1962), Price Theory: A Provisional Text, Chicago: Aldine Publishing Company.
GrossmanS. J. and Stiglitz J. E. (1976), ‘Information and Competitive Price Systems’, The American Economic Review, 66 (2): 246253.
HayekF. A. (1948), Individualism and Economic Order, Chicago: University of Chicago Press.
HayekF. A. (interviewee) (1983), Nobel Prize-Winning Economist Oral History Transcript, Los Angeles: Oral History Program, University of California.
HendersonJ. M. and Quandt R. E. (1958), Microeconomic Theory: A Mathematical Approach, New York: McGraw-Hill.
KayN. M. (1995), ‘Alchian and the ‘Alchian Thesis’’, Journal of Economic Methodology, 2 (2): 281286.
KirznerI. M. (2011), ‘Market Theory and the Price Theory’, in Boettke P. J. and Sautet F. (eds.), The Collected Works of Israel M. Kirzner, Indianapolis: Liberty Fund.
KitchE. W. (1983), ‘The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970’, Journal of Law and Economics, 26 (1): 163234.
KnightF. H. (1997), The Ethics of Competition, New Brunswick: Transaction Publishers.
KrepsD. M. (1990), A Course in Microeconomic Theory, Princeton: Princeton University Press.
LangloisR. N. (ed.) (1986), Economics as a Process: Essays in the New Institutional Economics, Cambridge: Cambridge University Press.
MarshallA. (1997), Principles of Economics, 8th ed., Amherst: Prometheus Books.
Mas-ColellA., Whinston M. D., and Green J. R. (1995), Microeconomic Theory, New York: Oxford University Press.
McCloskeyD. N. (1985), The Applied Theory of Price, 2nd ed., New York: Macmillan.
McCloskeyD. (1998), ‘The So-Called Coase Theorem’, Eastern Economic Journal, 24 (3): 367371.
MisesL. (1951), Socialism: An Economic and Sociological Analysis, New Haven: Yale University Press.
MisesL. (1966), Human Action: A Treatise of Human Action, 3rd ed., Chicago: Henry Regnery.
MisesL. (1975), ‘Economic Calculation in the Socialist Commonwealth’, in Hayek F. A. (ed.), Collectivist Economic Planning, Clifton: August M. Kelley.
MisesL. (2013), Epistemological Problems of Economics, Indianapolis: Liberty Fund.
RobbinsL. (1933), ‘Introduction’, in Wicksteed P. H. (ed.), The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory, London: George Routledge, pp. vxxiii.
SamuelsonP. A. (1947), Foundations of Economic Analysis, Cambridge: Harvard University Press.
SamuelsonP. A. (1948), Economics, New York: McGraw-Hill.
SeniorN. W. (1852), Four Introductory Lectures on Political Economy, London: Longman, Brown, Green, and Longmans.
ShirleyM. N. (2013), ‘Battles Lost and Wars Won: Reflections on “The Problem of Social Cost”’, Journal of Natural Resources Policy Research, 5 (4): 243247.
SimonsH. (1983), Simons’ Syllabus, Fairfax: Center for Study of Public Choice.
StiglerG. J. (1946), The Theory of Price, 1st ed., New York: The Macmillan Company.
StiglerG. J. (1966), The Theory of Price, 3rd ed., New York: The Macmillan Company.
StiglerG. J. (1976), ‘The Xistence of X-Efficiency’, The American Economic Review, 66 (1): 213216.
StiglerG. J. (1992), ‘Law or Economics?’, Journal of Law and Economics, 35 (2): 455468.
VarianH. R. (1978), Microeconomic Analysis, New York: W.W. Norton and Company.
VinerJ. (2013), Lectures in Economics 301, Erwin D. A. and Medema S.G. (eds.), New Brunswick: Transaction Publishers.
WagnerR. E. (2010), Mind, Society, and Human Action, New York: Routledge.
WeylE. G. (forthcoming), ‘Price Theory’, Journal of Economic Literature,
WicksteedP. H. (1933), The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory, London: George Routledge.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 6
Total number of PDF views: 52 *
Loading metrics...

Abstract views

Total abstract views: 1380 *
Loading metrics...

* Views captured on Cambridge Core between 18th January 2017 - 21st October 2017. This data will be updated every 24 hours.