Economists of the Twentieth Century Series

The Economics of Imperfect Knowledge

by G B Richardson

Published 26 August 1998

The central theme of this important book is that the knowledge on which business decisions are taken is limited and uncertain, and that the availability of this knowledge is affected by the nature of the market structure in place.

G.B. Richardson argues that the accepted theoretical models of market economies are generally based on assumptions about the knowledge possessed by economic agents which are ill-specified and unrealistic. As a result these models fail to explain properly how the economy really works. He examines the availability to firms of the information they need, as a function of the market structure within which they operate. Neglect of this relationship, he maintains, has rendered invalid the currently prevailing accounts of how markets allocate resources, and new criteria are proposed for judging the efficiency of alternative market forms. The book offers a fresh analysis of competition and cooperation between firms and of the process of innovation.

The Economics of Imperfect Knowledge will be welcomed by those interested in microeconomic theory, industrial organization and competition policy.