THE POSSIBILITIES OF MARKET DEVELOPEMENT CHANGES ADAPTATION FROM THEORETIC ECONOMY POINT OF VIEW

Abstract

Aiming of this article is on area of Theoretical Microeconomics. The current orthodoxy is criticized for overemphasizing the role of decreasing returns. Under decreasing returns, exogenous shocks are easily absorbed by the system and economists equipped with sophisticated tools are able to predict the result. The goal of paper gives an account of a recent attempt to rebuild economics along the lines of increasing returns. The used methods are coming out of current orthodoxy Microeconomics, which is criticized for overemphasizing the role of decreasing returns. Under decreasing returns, exogenous shocks are easily absorbed by the system and economists equipped with sophisticated tools are able to predict the result. For the nowadays economists try to make a correct picture of the modern world which is largely dominated by increasing returns. It is a typical, that small events, however unimportant they may seem, are magnified by the positive feedback. The system is thus set on a path and cannot shake off its history. Path dependent processes are illustrated by the persistence of the two formats of music for computer usage, MP3 and WMA. As the world is stuck with an inferior standard, government action is needed to adopt a better alternative. However, the second part of the article offers a successful refutation by Liebowitz and Margolis of the “path dependency” story both on the empirical and theoretical ground. This particular example of path dependency evolved into an ambitious interdisciplinary project whose aim is to introduce new, visionary approaches into the scientific thinking. The result mean to change and to complete the Neo - Classic Economics about part, that the no disregards only mechanist view of the world, there is disregards human will, enterprise and ability remodel world accordance with personal design. Processes that the system moves forward aren't at all random fluctuations.