The purpose of this newsletter is to revitalize interest in price theory. Thus far, the newsletter has been well-received. Nonetheless, we do get criticism. One frequent criticism is related to our argument that the competitive model is potentially useful regardless of the number of firms in the market. A second criticism that we receive is that price theory is really just some sort of free market indoctrination scheme. As a result of these criticisms, I would like to use today’s post to discuss a scenario in which I think the number of firms matter and I would like to provide an example in which price theory might imply
Externalities and the Numbers Problem
"this entire problem could have been avoided through zoning restrictions"
And probably would a great deal of other problems down the road