This is an excerpt from my paper which examines how contemporary economic realities challenge conventional price formation models. Traditional price theory, rooted in neoclassical equilibrium models, struggles to explain modern markets characterized by digital platforms, behavioral anomalies, and network effects. Rather than viewing prices solely as equilibrium outcomes, this section explores price as an information system and coordination mechanism shaped by institutional contexts and evolutionary market processes, proposing alternative approaches that better capture the dynamic nature of pricing in today’s economy.
I primed Claude with my ideas on price and here’s the abstract we came up with.
Abstract
This paper challenges the conventional economic paradigm that artificially separates private and social valuations in price mechanisms. Through a critical examination of mainstream economic philosophy and its historical evolution, I argue that market participants routinely incorporate social dimensions directly into their valuations, functioning as Price = Value Private + Social. The research traces how economic theory shifted from Glenn Loury’s original conceptualization of social capital as a group-contained phenomenon toward increasingly individualistic interpretations that marginalized the embedded nature of economic decisions. Drawing on critical realist philosophy and integrating insights from economic sociology, feminist economics, and ecological economics, I develop a theoretical framework that reconceptualizes price as a social institution intrinsically incorporating both private and social dimensions rather than requiring external correction for “externalities.” Through comparative analysis with conventional frameworks and empirical investigation using hedonic pricing models, the paper demonstrates how this integrated understanding resolves theoretical inconsistencies in contemporary economics while offering more coherent approaches to complex socioeconomic challenges. The implications extend beyond theoretical discourse to policy design, suggesting a fundamental shift from external correction to institutional design that recognizes the inherently social nature of market valuation.
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