Prices

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This chapter presents the contributions of Alfred Marshall, Joan Robinson and Milton Friedman to the study of prices. Firstly, Marshall highlighted the forces that shape the perfect markets and its prices. Secondly, Robinson considered the dynamics of real-world markets where imperfect competition seems to dominate. She showed how imperfect competition affects pricing and strategic decision making. Finally, Milton Friedman presented an analysis of inflation that restates the relevance of the quantity theory of money to explain the roots of inflation. His approach to the trade-off between inflation and unemployment has had deep consequences in the neoliberal economic policy agenda.