KakarotHandtke, Egmont (2011): Primary and secondary markets.
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Abstract
The analytical starting point determines the course of a theoretical investigation and ultimately the productiveness of an approach. The classics took production and accumulation as their point of departure, the neoclassics exchange. Exchange implies behavioral assumptions and notions like rationality, optimization, and equilibrium. It is widely recognized that this approach has led into a culdesac. To change a theory means to change its premises or, in Keynes’s words, to ‘throw over’ the axioms. The present paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. These stocks constitute the demand and supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Realized appreciation in the secondary markets is different from income or profit. To treat primary and secondary markets alike is therefore a category mistake. Vice versa, to take a set of objective propositions as analytical starting point yields a comprehensive and consistent theory of market exchange and valuation.
Item Type:  MPRA Paper 

Original Title:  Primary and secondary markets 
Language:  English 
Keywords:  new framework of concepts; structurecentric; axiom set; residuals; real and monetary stocks; money; credit; financial saving; nonfinancial saving; net worth; financial profit; nonfinancial profit; retained profit; appreciation; wealth 
Subjects:  D  Microeconomics > D5  General Equilibrium and Disequilibrium > D50  General D  Microeconomics > D4  Market Structure, Pricing, and Design > D40  General 
Item ID:  43337 
Depositing User:  Egmont KakarotHandtke 
Date Deposited:  21 Dec 2012 14:57 
Last Modified:  02 Oct 2019 05:33 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/43337 
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Primary and secondary markets. (deposited 26 Aug 2011 10:55)
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