The Extended Insights into Market Behavior

Abstract

The recent socioeconomic development has emerged innovative business models that have much concerned on the value creation and value distribution. Many modern economic issues cannot be explained within traditional economic theory. It requires conducting theoretical models to reflect the market behavior in the real-world economy. From the value creation perspective, this paper attempts to clarify the concepts of price and value of a commodity in the market. These concepts are the base to define market equilibrium that includes production equilibrium and consumption equilibrium. In addition, the market supply is identified from the relation between rational choice and market equilibrium, in which the market supply depends on both marginal cost and market demand. The extension of market equilibrium along with the interdependence of supply and demand is the crucial foundation to the theory of market equilibrium. Since endogeneity and exogeneity are considered in the market equilibrium model, the paper provides a testable theoretical framework for empirical researches on market behavior.KeywordsValue conceptMarket equilibriumMarket behaviorRational choiceEndogeneity and exogeneity