Competition as market progress: An Austrian rationale for agent-based modeling

Abstract

Economists recognize competition as fundamental to economic science. General equilibrium is not competition; Austrians, like other economists, have sometimes confused the two. The socialist calculation debate and the elimination of competition by socialists in the Soviet Union offer insight into danger of using an equilibrium framework to study competition. Current policy models are based on a general equilibrium framework, but heterogeneous interactive agent-based models are rising to challenge them. Austrian economists should embrace this new direction and guide the creation of agent-based models of the economy.