Microfoundations of Evolutionary Economics
by Yoshinori Shiozawa  (Author), Masashi Morioka (Author), Kazuhisa Taniguchi  (Author)

About the Author
Yoshinori Shiozawa: BSc (Kyoto University), MSc (Kyoto University), DEA (University of Nice). Worked as a Research Associate at the Department of Mathematics and at the Institute of Economic Research, Kyoto University, (Associate and Full) Professor at the Department of Economics and Graduate School for Creative Cities, Osaka City University, and Professor at the Department of Commerce, Chuo University. He was also the second President of the Japan Association for Evolutionary Economics. He is currently a Professor Emeritus (Osaka City University) and Fellow of the Japan Association for Evolutionary Economics. He was awarded the Suntory Prize for Social Sciences and Humanities in 1992 and the JAFEE Prize in 2016.
Masashi Morioka: BA, MA and PhD (Economics, all from Kyoto University). He is a member of the Japan Association for Evolutionary Economics and an associate editor of the Evolutionary and Institutional Economic Review. He is currently a Professor at the Faculty of International Relations, Ritsumeikan University.
Kazuhisa Taniguchi: BSc (Ritsumeikan University), PhD (Economics, Osaka Prefecture University). Worked as (an Associate and Full) Professor at the Faculty of Economics, Osaka Sangyo University, and as a Professor at the Faculty of Economics and Graduate School of Economics, Kindai University. He is currently a member of the Japan Association for Evolutionary Economics and a Lecturer (part-time) at Kindai University.

About this book
This book provides for the first time the microfoundations of evolutionary economics, enabling the reader to grasp a new framework for economic analysis that is compatible with evolutionary processes. Any independent approach to economics must include a value theory (or price theory) and price and quantity adjustment processes. Evolutionary economics has rightly and successfully concentrated its efforts on explaining evolutionary processes in technology and institutions. However, it does not have its own value theory and is not capable of explaining the workings of everyday economics processes, in which any evolutionary process would take place.
Our point of departure is the addition of myopic agents with severely limited rational and forecasting capacities (in stark contrast to mainstream economics). We show how myopic agents, in a complex world, can produce a stable price system and demonstrate how they can adjust their production to changing demand flows. Agents behave without any knowledge of the overall process, and they generate a stable economy as large as the global network of exchanges. This is the true “miracle” of the market mechanism. In contrast to mainstream general equilibrium theory, this miracle can be explained without the need for an auctioneer or infinitely rational agents. Thanks to this book, evolutionary economics can now claim to be an independent approach to economics that can completely replace mainstream neoclassical economics.

Brief contents
1 Microfoundations of Evolutionary Economics. 1
    1.1 Introduction 1
    1.2 Ubiquity of Intractable Problems. 5
    1.3 Myopic Agents and the Structure of Human Behavior 16
    1.4 Environment of Economic Activities 27
    1.5 Methodology of Analysis 40
    References 49
2 A Large Economic System with Minimally Rational Agents 53
    2.1 Introduction 53
    2.2 A Set of Postulates We Assume in This Chapter 55
    2.3 Some Characteristic Features of the System 64
    2.4 Minimal Price Theorem (Fundamental Case) 69
    2.5 Some Extensions of the Minimal Price Theorem. 87
    2.6 International Trade Situation 101
    2.7 Quantity Adjustment Process 111
    References 136
3 The Basic Theory of Quantity Adjustment 139
    3.1 Capitalism as a Demand-Constrained Economy. 140
    3.2 Stockout Avoidance in Short-Term Decisions by Individual Firms 150
    3.3 Quantity Adjustment Process and Dual Functions of Inventories 161
    3.4 An Overview of Preceding Analyses. 169
    3.5 Conclusions 187
    Appendix 188
    References 192
4 Dynamic Properties of Quantity Adjustment Process Under Demand Forecast Formed by Moving Average of Past Demands. 195
    4.1 Sequence of Decisions and Actions 195
    4.2 The Case of Demand Forecast Formed by the Simple Moving Average 205
    4.3 The Case of Demand Forecast Formed by the Geometric Moving Average. 216
    4.4 Mechanism of Stabilization Through Averaging of Past Demands in Forecast Formation. 223
    4.5 Conclusions 232
    Appendix 235
    References 255
5 Extensions of Model Analysis of the Quantity Adjustment Process in Several Directions 257
    5.1 Work-in-Process Inventory, Partial Adjustment, and a Firm-Level Model 257
    5.2 Quantity Adjustment Accompanied by Stockout, Rationing, and Bottleneck 271
    5.3 Mid- and Long-Term Changes in Final Demand 282
    5.4 Conclusions 288
    References 289
6 Significance of Nonlinearity and Many Goods Models 291
    6.1 Introduction 292
    6.2 Scarf’s Inventory Theory and Our Search Focuses 297
    6.3 The Periodic Production Model and the Difference in the Number of the Kinds of Goods 307
    6.4 Numerical Experiments for the (S, s) Policy Model with Many Kinds of Goods 314
    6.5 Conclusions 321
    References 323
7 Exchange and Arbitrage 325
    7.1 Money, Price, and the Equivalence Relations. 325
    7.2 Why Do We Exchange?. 328
    7.3 Why Do We Practice Arbitrage? 335
    7.4 Buying-Selling and Arbitrage in Financial Markets and Product Markets 342
    7.5 Conclusion 345
    References 346

Series: Evolutionary Economics and Social Complexity Science (Book 15)
Pages: 346 pages
Publisher: Springer; 1st ed. 2019 edition (August 27, 2019)
Language: English
ISBN-10: 4431552669
ISBN-13: 978-4431552666

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