Economic Implications of Equilibrium

What the paper says

This paper reconstructs the concept of equilibrium in economics, proposing a view centered on scarcity, competition, and transaction cost. Its core thesis is that the essence of equilibrium is a state where interpersonal conflicts of interest are resolved, achieved under constraints through clearly defined criteria of competition. Scarcity induces competition, and competition must occur under specific constraints to determine winners and allocate resources. A state lacking clear criteria – termed “disequilibrium” – cannot persist in the real world. The paper further deconstructs the subjectively labeled “entrepreneurship” as the specific combination of market and non-market contracts chosen by individuals to minimize rent dissipation under given information cost constraints; its essence is an equilibrium outcome. Further, through a case study of the counterfeit goods market, the paper empirically analyzes how information costs influence the marginal substitution process between price, transaction cost, and non-price criteria of competition. This process ultimately achieves a general equilibrium characterized by minimized rent dissipation.