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The main failure of Economics 101: Misleading students with an equilibrium modelthe importance of equilibrium stability is often neglected in discussions of economic methodology, and for this reason little attention is paid to how equilibria arise and what ensures that they persist. Instead, textbook economics often begins with the a priori assumption of the existence of a state of equilibrium, and then proceeds to normative conclusions about market competition, regulation, etc. This paper proposes that what is needed is an account of endogenous stability, i.e., an account of how microeconomic behavior affects the presence and stability of equilibrium phenomena in the aggregate.
Simon Fraser University