Intertemporal Competitive Equilibrium: An Empirical Study of Speculation

Abstract

In his prologue to the theory of speculation, Samuelson (1966a, p. 947 and passim) deals exclusively with the case of "foreseen changes in future supply and demand" in outlining a theory of intertemporal competitive price-quantity equilibria in markets that are subject to speculation. The analysis was considered to be a preliminary step to the more complicated cases involving uncertainty. Modern extensions of the theory (Mandelbrot, 1971; Samuelson, 1972; Schimmler, 1973) to include uncertainty have been accompanied by such vestiges of this original "perfect knowledge" model (e.g., common, well-defined expectations) as demanded, perhaps by the limitations of mathematical machinery and imagination for restructuring the theory.

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