The Austrian school of economics, which originates from the publication of Carl Menger’s ‘Principles of Economics’ in 1871,161 is a serious adversary of the neoclassical framework in the field of microeconomics.162 Both schools attempt to explain the functioning of markets, but while neoclassicism refers to the static model of equilibrium analysis, Austrianism regards market coordination as a truly dynamic process.163
The following five core assumptions of Austrian economics are the point of departure for the description and explanation of the market process:
(1) Methodological individualism:
Methodological individualism refers to the practice of viewing social entireties such as national economies as the product of individual action. This assumption has been part of Austrian economics at all times.165 “Economics is not about things and tangi[Seite 20↓]ble material objects; it is about men, their meanings and actions”,166 because “[u]ltimately, the entire social system, its prices, costs, supply, demand, the division of labour, money etc, must be traced to their roots in the actions, decisions and plans of individuals […]”.167 The individual as the key to all economic effects on markets must be regarded as the superstructure of Austrianism which predetermines all scientific research.168
(2) (Radical) Subjectivism:
Subjectivism and its variation of radical subjectivism is firstly an approach to the study of human interaction with things or other humans and secondly the major tenet that distinguishes Austrians from neoclassicism. Economists who try to explain human interaction must start with the subjective meaning the individuals attach to their actions and their subjective mental states:169 “So far as human actions are concerned the things are what the acting people think they are […] [and] unless we can understand what the acting people mean by their actions, any attempt to explain them […] is bound to fail”.170 The perceived marginal utility, a strictly subjective judgment, determines the value of a good for a consumer, and hence its price.171 These subjective value judgments for identical goods determine the attractiveness of exchanges. The discrepancy explains the positive net value of exchange.172 Subjective value judgments depend on subjective knowledge.173 The so-called ‘radical subjectivists’, most notably Lachmann and Shackle, assume that human actors decide on expectations of the future which they have at the moment of decision.174 Individual expectations differ because the future is unknown and unforeseeable.175 New knowledge that comes in the course of time is responsible for the incompatibility of the actors’ plans with those of others at any point in time.176 Equilibrating forces are always overtaken by unexpected and disequilibrating change before a long-run general equilibrium is [Seite 21↓]reached. Markets for particular goods may temporarily find equilibrium, but the whole economy never does.177
(3) Individuals and their will to change and create:
The differences of individuals manifest themselves in divergent endowments and divergent experiences, resulting in dissimilar knowledge, values and heterogeneous expectations.178 Constrained by incomplete wisdom, human beings are creative and act toward change. They have the capacity of acting with self-interest and purpose to pursue the satisfaction of their hierarchy of needs. This innate quality in humans is identified as homo agens, the acting man who makes conscious, reasoned decisions.179 Mises identifies three reasons for human action: first, “[a]cting man is eager to substitute a more satisfactory state of affairs for a less satisfactory”. Second, he “[…] imagines conditions that suit him better, and his action aims at bringing about this desired state”. Third, the actor has “[…] the expectation that purposeful behaviour has the power to remove or at least alleviate the felt uneasiness”.180 His will to move into a (subjectively perceived) preferable state of affairs in connection to different endowments fuels the market process.181 Since each individual is unique, everyone can perceive different ends. Some strive for sexual satisfaction, food, material things, but they may as well care for altruistic or the so-called higher goals.182 For Austrians, economic theory is ‘praxeology’, the science of human action.183 The axioms of praxeology are supposed to be true and meaningful, because they are the essence of human being. A verbal deduction of the implications of praxeology is true and meaningful as well, mathematical symbolization superfluous.184
(4) The influence of space and time:
The influence of space and time is very important in Austrian theorizing. If time is perceived as a flow of events, it brings novelty and surprises. Living and acting today is connected to tomorrow’s actions, since individual experience of today’s events alters tomorrow’s perception of events.185 The elapse of time permits the gaining of [Seite 22↓]new experiences, which acknowledges the creation and alteration of knowledge.186 Newly discovered knowledge often makes clear to the economic actors that their expectations of the future were wrong and in need of revision.187 In the course of these revisions and through actor’s learning of truly novel things, the market process becomes an engine of discovery.188 In this sense, the Austrian theory of entrepreneurship critically depends on a dynamic perception of time.189
(5) Radical ignorance and its influence on the market process:
Kirzner distinguishes two kinds of ignorance: rational ignorance and radical (sheer, utter) ignorance. In the former case, actors maximize profit or utility with foreseeable knowledge. The actors are aware of their amount of knowledge and they are aware of the fact that if they accept certain expenses of money or time, they can gain additional knowledge in a planned search. The search for additional information is conducted until the marginal return of information equals the marginal cost for the search, so that an optimum is attained. Rational ignorance conforms to neoclassical theory.190 The latter case is in line with the Austrian framework, where the existence of radical ignorance is assumed. Being radically ignorant instead of ignorant by choice does not only mean that there is not any prior knowledge concerning the costs and benefits of becoming aware of some novel facts,191 but it refers to the total (radical, sheer) unawareness of the existence of knowledge that is not known so far. New facts may be accidentally learned by chance or inevitably during participation in the market process.192 If actors possessed knowledge of things unknown so far, it would certainly affect their plans.193 Thus, ignorance allows for opportunities in the market process, which alert entrepreneurs may recognize and exploit (see section 4.2.1, pp. 22-24).194
Austrian economic theory explains how information influences the decisions of market actors and how the market succeeds in distributing relevant information to those who will make the best use of it. The problem of information has already been solved [Seite 23↓]in neoclassic theory due to the assumption of individual with perfect knowledge.195 In the following part it will be explained and described how the market process solves the informational problem in Austrian economics.
The interaction of market participants or market actors – consumers, entrepreneur-producers and resource owners – takes place in a market,196 so it can be said that the market is the result of interacting decisions of market actors during a given period of time.197 Yet, a market must not be regarded as a static place for interaction. The market is only delimited from an individual perspective. Each actor perceives the boundaries of the market differently, depending on his radical ignorance. In an extreme case, a market may only consist of two actors: one buyer and one seller. This extreme Austrian micro-perspective is incompatible with the idea of a single market where all suppliers of one good compete against each other.198 The people who interact in the market try to fulfil plans by buying and selling.199 They hope to enhance their situation and to reach advantages through exchange.200 The homo agens in Austrian economics is, in contrast to the homo oeconomicus of neoclassical economics, not limited to given means and ends. He has the will and alertness to subjectively formulate ends worth striving for and finding the means necessary to reach his ends. His decisions are economizing on the basis of his chosen ends and known means, i.e. the actor tries to most efficiently maximize ends with available means. With respect to his knowledge it can be said that he acts subjectively rational.201 Each actor has a different endowment of abilities and objectives (wants and needs), and possesses incomplete and diverging knowledge about current demand and supply, prices and qualities. Market participants formulate their expectations and make plans on this basis.202 Successful actors and their counterpart in the market offer each other the best opportunity each one knows of.203 Being successful may turn out to be difficult, because “[…] knowledge of the circumstances of which we must make use never exists in concen[Seite 24↓]trated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess”.204 “As action necessarily is directed toward influencing a future state of affairs, […] it is affected by every incorrectly anticipated change in the data […], [and] […] the outcome of action is always uncertain. Action is always speculation”,205 which implies that some plans that have been formulated are disadvantageous – they will either fail or not fully exploit market opportunities. When plans cannot be executed, the actors may realize that they have been overly optimistic concerning the decisions of other market actors; or they realize that they have missed potential profit because they were too pessimistic about market conditions.206 In any case, new information flows back to the market participants as a result of market interaction. Actors in the market learn from experience and systematically modify and revise their plans, which led to suboptimal decisions, for the next period of interaction.207 Since single market transactions are not independent, but influence each other in many ways, all market actors are engaged in the revision of plans. Since one period is not enough to disclose all market knowledge to the actors, there is again a significant probability that both correct and incorrect decisions will be made in the following period of market interactions.208 The actor’s ability to learn from prior misjudgements and to test newly revised plans in the market sets the market process in motion.209 The market thus becomes a means of discovering and disseminating “[…] knowledge of the particular circumstances of time and place”.210 In this system knowledge about preferences and technologies is dispersed among many people. Prices for the diverse goods and services send a signal that fulfils the function of coordinating the actions of the separated individuals.211 Prices offer unambiguous incentives that tell the market actors which products are valued most highly. Market actors recognize what to do and produce,212 since they try to gain profits and avoid losses.213 If the actors’ current decisions incorrectly anticipate the decisions made by others, a state of disequilibrium prevails.214 In this case, prices [Seite 25↓]reflect defective information.215 The market process of mutual anticipation of plans continues until correct foresight drives all ignorance out of the market.216 Without exogenous change in preferences, technological possibilities or resource availability, all decisions made by buyers, sellers and producers will inevitably be aligned, all plans will be correctly executed and the market will reach a state of equilibrium.217
The concept of the entrepreneur is central for the market process,218 but the societal role that entrepreneurs fulfil is feasible only in the presence of ignorance.219 To clarify this, we will imagine a market where nobody is able to learn from experience, so that all actors infinitely repeat the same decisions. There are six possible outcomes of market interaction (see fig. 3, p. 76):220
We introduce a group of outsiders into this world – entrepreneurs – who are able to learn from experience and to recognize opportunities for entrepreneurial profits. They are not necessarily interested in buying for themselves,221 but they are alert to where a good can be sold at a higher price than the purchase price. In our market of ignorant actors these entrepreneurs would instantaneously perceive profit opportunities that [Seite 26↓]arise from engaging in arbitrage in cases three and six: first, the entrepreneurs would buy resources from sellers who did not realize that they could charge more (case six). Next, the entrepreneurs would sell the goods to those buyers who did not realize that they could buy identical goods for less money (case three).222 Successful entrepreneurship can attract imitators and competitors who try to outdo the original entrepreneur with better deals.223 “The competition between the various entrepreneurs will move them to offer to buy from the low-price sellers, at prices higher than these sellers had thought possible; entrepreneurs in competition will also sell to high-price buyers at prices lower than these buyers had thought possible”.224 Competition will move prices to a correct estimate of the participants’ eagerness to buy.225 In his attempt “[…] to offer opportunities which market participants will consider more attractive than those available elsewhere […]”, the entrepreneur relieves “[…] the consumer of the necessity to be his own entrepreneur”.226 Profitable opportunities for arbitrage lure entrepreneurs to their discovery. The opportunity is exploitable until entrepreneurs in the competitive market process have reallocated all resources to a new equilibrium, where both opportunity and the misallocation of resources are eliminated.227 Sometimes discoveries are disequilibrating and even increasing ignorance,228 but in general the market process does not only lead to an adjustment of individual plans, but also to a state in which everything that is produced will be produced by those who can make it cheaper than (or equally cheap as) the next-best competing entrepreneur. Everything will be sold at a cheaper (or the same) price than the next-best competing entrepreneur asks.229
The entrepreneurs are the “driving force of the whole market system”,230 and the entrepreneurs in competition systematically force the economy towards equilibrium; their alert exploitation of opportunities brings the economy in line with the information available.231 Kirzner’s entrepreneur conforms to Mises’ and Hayek’s notion that “[…] a tendency towards equilibrium exists” since “[…] under certain conditions […] [Seite 27↓]the expectations of the people and particularly of the entrepreneurs will become more and more correct”.232 However, an equilibrium need not necessarily be reached because equilibrating processes are continually interrupted by changes in the underlying variables (preferences, resource availabilities, technological possibilities), which initiate new equilibrating processes.233
It is the entrepreneur’s alert mind that observes and exploits profitable differences in the pattern of relative prices.234 The pure entrepreneur acts as an arbitrageur of opportunities. He does not need any initial endowment with resources. Entrepreneurship is therefore a costless activity. The sole prerequisite to compete is free market entry, which is always given in the absence of a monopoly over an essential input. Consequently, everybody can be an entrepreneur.235 The focus of entrepreneurship is not on a particular group of men, but on a function.236 The distinctive characteristics of entrepreneurs as opposed to non-entrepreneurs are aggressiveness, boldness, creativeness, and leadership qualities which are all manifested in alertness.237 Alertness is a refined, abstract form of the knowledge of how to collect and employ information and resources.238 Alertness on its own is not sufficient for progress in the market process; it just offers chances that may be seized.239 It is difficult to deliberately search for pure profit opportunities because radical ignorance is an obstacle to the discovery of such opportunities.240 The Kirznerian entrepreneur is responsive to opportunities already existent and waiting to be noticed.241 In the multi-period case of the market process entrepreneurs are creatively and imaginatively shaping the future through responsiveness to intertemporal opportunities.242
Entrepreneurs may engage in the so-called pure arbitrage by selling items for more than they paid. Entrepreneurship is also consistent with intertemporal arbitrage, if items are bought at a lower price in one period than they are sold for in a subsequent [Seite 28↓]period.243 The third option is that entrepreneurs recognize errors of coordination between the sum of prices for a bundle of resources needed to produce a product and the price of the output on the product market. Although they engage in the transformation of resources into a higher-state product, they still do not need to contribute resources of their own.244 The entrepreneur does not even need capital funds in case of time-consuming production, if the opportunity is sufficient to enable him to offer an attractive interest payment.245
The market process advances only if alertness is paired with successful entrepreneurship, which fulfils three notable criteria. First, the subjective perception of an opportunity must be congruent with the objective data. Second, the entrepreneur’s offer must be the most advantageous in comparison to others. Third, the entrepreneur must make the relevant market aware of his advantageous offer.246 While the first criterion is self-evident, the others deserve explanation.
Acting men are in the favourable state of choosing between various opportunities,247 from which they will choose the most attractive. An opportunity is more attractive if a lower (higher) price is required (offered) for the same product, from which follows that entrepreneurial competition takes the form of competition for the best price. An opportunity is also better compared to another one, if it offers buyers a more desirable product for a given price respectively if it asks of sellers something they relinquish less reluctantly. That is why competition takes place in the kinds and qualities of goods and services as well,248 which means that product differentiation is essential for entrepreneurial success in the face of competition.249 Consumers’ wishes and desires are not obvious facts, but problems to be solved in the market process.250 Mises stresses the primacy and sovereignty of the consumers over entrepreneurial action in regard to this. At first glance entrepreneurs are responsible for production and they are steering the economy, but in fact they are obeying the consumer’s orders. If entrepreneurs do not pay attention to the continually changing tastes and desires for goods [Seite 29↓]and services, they will be driven out of the market.251 Strictly speaking, consumers are not longing “[…] for tangible goods as such, but for the services which these goods are fitted to render them”.252
The third criterion is necessary because “[t]he consumer is not omniscient. He does not know where he can obtain at the cheapest price what he is looking for. Very often he does not even know what kind of commodity or service is suitable to remove most efficaciously the particular uneasiness he wants to remove. […]. To convey to him information about the actual state of the market is the task of business propaganda”.253 The entrepreneur must not only make information available to consumers, his success crucially depends on the consumers’ awareness of a purchase opportunity. In wealthy societies with a broad range of products, more and more provocative advertising is necessary to alert market participants to the diversity of offers.254 In the 1940s Mises recognized that “[b]usiness propaganda must be obstrusive and blatant. […] Advertising is shrill, noisy, coarse, puffing, because the public does not react to dignified allusions. It is the bad taste of the public that forces the advertisers to display bad taste […]”.255 To conclude, entrepreneurial alertness includes anticipating the needs and wants of consumers, designing and developing products to satisfy those needs at competitive prices, and making the opportunity available at such a location and especially through information that the consumer cannot miss it.256
The alert entrepreneur who is the only producer capable of offering a differentiated good or service at a given point in time is in the favourable position of having a temporary monopoly from a short-run perspective. He can reap above-average returns, but a position without unique resource ownership is vulnerable to imitation in a competitive environment and subsequent erosion of high margins in the longer run.257 The only possibility to eliminate competition and to reach a protected monopoly in the [Seite 30↓]absence of legislative barriers is the exclusive control of an essential resource.258 A long-run monopolistic position may be held due to initial resource endowments, e.g. if someone owns a unique natural skill. Alternatively, such a position may be won by alert entrepreneurial (and hence competitive) action.259 This happens if a market participant recognizes “the possibility of making large profits by buying up all the available supply of a given resource, and then establishing himself as the monopolist producer of a particular commodity”.260 Such an action is competitive in the long-run perspective because the entrepreneur made himself a monopolist resource owner in the course of his activities, a possibility that was ex ante open to all competing entrepreneurs.261 Austrian economics implies the rejection of governmental interference into the market process despite the occurrence of monopolies,262 because coordination in the decentralised market process is always superior to centrally planned coordination.263 This position should not be mistaken with laisser-faire, since Austrian economists clearly appreciate the necessity of institutions for the functioning of the market.264
Austrian economics is focused on the equilibrating process that can be observed in markets, with emphasis being put on the role that information and entrepreneurship fulfil in the process. Despite of its long history, no formalised theory is to be found in the works of its representatives Mises, Hayek, or Kirzner, to name just a few. A complete epistemological analysis of Austrian economics is impossible without a set of hypotheses. Fortunately, the large amount of work on Austrian economics in verbal form and the fundamentals of Austrian economics put forward in this thesis allow the deduction of a number of possible hypotheses. The following hypotheses are a step-by-step reflection of the market process.
Prices can be very quickly adapted in regard to supply and demand, e.g. if the demand for a particular good is very high and keeps on rising while the produced amount remains fixed, prices can rise and still all goods produced will be sold. Prices are a [Seite 31↓]piece of information that lures entrepreneurs either to produce more of a certain commodity or to slow down or stop production.265 Hypothesis H1 follows:
H1: If prices in a market are a measure of relative shortages, then they serve as a means of communicating information.
Hypothesis H2 is not only a tautological transformation of the definition of the state of equilibrium (the market will be in equilibrium given perfect information), but here it is seen as an empirical observation from reality, that is hypothesized about. The incompleteness of information results in incorrect plans that lead to poorly adjusted plans and thus a state of disequilibrium:266
H2: If information about supply and demand in a market is incomplete (if ignorance prevails), then the market will be in disequilibrium.
A market that is in disequilibrium is made up of various suboptimal exchange relations. Entrepreneurs, who are alert to the existing arbitrage-opportunities in such a market, can earn risk-less profits.267 Hypotheses H3 and H4 express this:
H3: If the market for a good or service is in disequilibrium, then opportunities for arbitrage exist.
H4: If opportunities for arbitrage exist, then alert entrepreneurs will appear to exploit these opportunities.
Entrepreneurial activities cause the generation of new knowledge, e.g. through an alteration of prices. Alert entrepreneurs perceive and interpret these new signals. Since making profits is the decisive entrepreneurial motive, some will try to gain a share of such opportunities by imitating and improving the original entrepreneur’s offer,268 which is expressed in Hypothesis H5:
H5: If alert entrepreneurs exploit opportunities, then information about their activities spreads in the market in the course of time and imitators will be attracted.
The homo agens has the ability to learn and alter his plans. A reduction of his ignorance due to additional information will thus improve his decision-making capabili[Seite 32↓]ties.269 The buyer’s enhanced plans will reward good offers in the market and punish bad offers through the allocation of resources.270 Furthermore, buyers profit from entrepreneurial sellers and their competitors in the market who drive down prices to an equilibrium level.271 Buyer and seller thus start a tendency towards equilibrium. Hypotheses H6 and H7 follow:
H6: If information spreads and imitators appear, then experience and learning result in enhanced decision-making and plans that mutually fit better.
H7: If better mutual plans are made, then an equilibrating tendency commences.
161 Cf. Smith (1986), p. vii.
162 Cf. Kerber (1997), p. 33. For a neoclassical critique of Austrianism, cf. Caplan (1999); for an Austrian critique of neoclassicism cf. Block/Barnett II/Wood (2002).
163 Cf. Lingen (1993), pp. 70-72; 168; Hayek (1949), p. 94.
164 Cf. Rese (2000), p. 66.
165 Cf. Christainsen (1994), p. 11.
166 Mises (1949), p. 92.
167 Kirkpatrick (1983), p. 46.
168 Cf. Rese (2000), p. 67.
169 Cf. Horwitz (1994), p. 17.
170 Hayek (1952), pp. 44; 53.
171 Cf. Kirkpatrick (1983), pp. 46f.
172 Cf. Rese (2000), p. 67.
173 Cf. Horwitz (1994), p. 18.
174 Cf. Kirzner (2000), p. 46.
175 Cf. Lewin (2000), p. 387.
176 Cf. Moss (2000), p. 369.
177 Cf. Lachmann (1976), pp. 60f.
178 Cf. Rese (2000), p. 68.
179 Cf. Oakley (1997), p. 5.
180 Mises (1949), pp. 13f.
181 Cf. Rese (2000), p. 68.
182 Cf. Mises (1949), p. 14.
183 Cf. Prychitko (1994a), p. 77.
184 Cf. Rothbard (1976), p. 22.
185 Cf. O’Driscoll Jr./Rizzo (1985), p. 3.
186 Cf. Lachmann (1959), p. 73.
187 Cf. Moss (2000), p. 369.
188 Cf. O’Driscoll Jr./Rizzo (1985), p. 9.
189 Cf. Rese (2000), p. 69.
190 Cf. Kirzner (1992), pp. 154f.
191 Cf. Ikeda (1994), p. 23.
192 Cf. Hayek (1937), p. 51; Hayek (1994), p. 249; Kirzner (1988), pp. 32-34.
193 Cf. Hayek (1937), p. 51.
194 Cf. Kirzner (1973), pp. 66f.; Kirzner (1988), pp. 152f.
195 Cf. Kirzner (1988), p. 45.
196 Cf. Kirzner (1973), p. 6.
197 Cf. Kirzner (1973), p. 9.
198 Cf. Rese (2000), pp. 74-76.
199 Cf. Kirzner (1973), p. 71.
200 Cf. Plinke (2000b), p. 59.
201 Cf. Kirzner (1973), p. 33.
202 Cf. Rese (2000), p. 71; Plinke (2000b), p. 63.
203 Cf. Kirzner (1973), p. 12.
204 Hayek (1945), p. 519.
205 Mises (1949), p. 253.
206 Cf. Kirzner (1973), p. 10.
207 Cf. Plinke (2000b), p. 63; Kirzner (1973), p. 71.
208 Cf. Plinke (2000b), p. 59
209 Cf. Plinke (2000b), p. 59; Kirzner (1973), p. 10.
210 Hayek (1945), p. 521; cf. Kirzner (1988), p. 32; Lachmann (1976), p. 59.
211 Cf. Hayek (1945), p. 526; Hayek (1994), p. 253; Hayek (1996), p. 309.
212 Cf. Hayek (1994), p. 258.
213 Cf. Mises (1949), pp. 325f.; Kirzner (1990), p. 29; Baird (1994), p. 147.
214 Cf. Kirzner (1988), p. 127.
215 Cf. Kirzner (1988), pp. 16f.
216 Cf. Hayek (1937), pp. 41f.; Hayek (1994), pp. 255f.
217 Cf. Kirzner (1973), pp. 10f.
218 Cf. Plinke (2000b), p. 59.
219 Cf. Kirzner (1988), pp. 68; 153.
220 Cf. Kirzner (1973), p. 14; Plinke (2000b), pp. 60f.
221 Cf. Picot/Reichwald/Wigand (2001), p. 34.
222 Cf. Kirzner (1973), pp. 14f..
223 Cf. Rese (2000), p. 79.
224 Kirzner (1973), p. 15.
225 Cf. Kirzner (1973), p. 15.
226 Kirzner (1973), p. 136.
227 Cf. Kirzner (1988), p. 108.
228 Cf. Kirzner (1992), p. 45.
229 Cf. Hayek (1994), p. 256.
230 Mises (1949), p. 249.
231 Cf. Kirzner (1988), p. 134; Kirzner (1997), p. 62.
232 Hayek (1937), p. 44; cf. Kirzner (1997), p. 62; cf. also Mises (1949), p. 352: “Both the logical [Austrian] and the mathematical [neoclassical] economist assert that human action ultimately aims at the establishment of such a state of equilibrium and would reach it if all further changes in data were to cease”.
233 Cf. Kirzner (1992), pp. 42; 45.
234 Cf. Lachmann (1976), p. 56; Kirzner (1988), p. 152; Kirzner (1992), p. 50.
235 Cf. Kirzner (1973), p. 16; Ikeda (1994), p. 25.
236 Cf. Mises (1949), p. 252.
237 Cf. Kirzner (1999), p. 13.
238 Cf. Kirzner (1988), p. 19.
239 Cf. Kirzner (1988), p. 18; Rese (2000), p. 76.
240 Cf. Kirzner (1997), p. 71.
241 Cf. Kirzner (1973), p. 74.
242 Cf. Kirzner (1985), pp. 63f.
243 Cf. Kirzner (1992), p. 50.
244 Cf. Kirzner (1973), p. 44; Kirzner (1992), p. 50.
245 Cf. Kirzner (1973), p. 49.
246 Cf. Rese (2000), pp. 76f.
247 Cf. Mises (1949), p. 94.
248 Cf. Kirzner (1973), pp. 23f.; 135.
249 Cf. Kirkpatrick (1983), p. 47; Kirzner (1988), p. 21.
250 Cf. Kirzner (1988), p. 33.
251 Cf. Mises (1949), p. 270; cf. also pp. 227, 258f.
252 Mises (1949), p. 234. The economic system seen as a means to satisfy consumer needs goes back to Carl Menger, as well as the notion that items bought and sold in the market are valued only insofar as they contribute toward need satisfaction; cf. Kirzner (1992), p. 71.
253 Mises (1949), p. 316.
254 Cf. Reekie (1994), pp. 158f.
255 Mises (1949), pp. 316f.
256 Cf. Kirkpatrick (1983), pp. 47f.
257 Cf. Kirzner (1973), pp. 133f.; Jacobson (1988), p. 415. A monopoly is understood as a position immune of competitive entry, so a competitive environment on the contrary is marked by free entry to the market; cf. Kirzner (1973), p. 131; Ikeda (1994), p. 25.
258 Cf. Kirzner (1988), pp. 114f.
259 Cf. Kirzner (1973), p. 131.
260 Kirzner (1973), p. 22; Italics in original.
261 Cf. Kirzner (1973), p. 132.
262 Cf. Hayek (1996), p. 163.
263 Cf. Kirzner (1992), p. 161.
264 Cf. Hayek (1996), p. 163.
265 Cf. Hayek (1994), pp. 258f.; Hayek (1945), p. 526.
266 Cf. Kirzner (1988), p. 127.
267 Cf. Kirzner (1973), pp. 14f.
268 Cf. Rese (2000), p. 79.
269 Cf. Moss (2000), p. 369.
270 Cf. Jacobson (1992), p. 788.
271 Cf. Kirzner (1988), p. 108.
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