Front Page Titles (by Subject) Prices, Costs, and Market Equilibrium - Cost and Choice: An Inquiry in Economic Theory, Vol. 6 of the Collected Works
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Prices, Costs, and Market Equilibrium - James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory, Vol. 6 of the Collected Works 
The Collected Works of James M. Buchanan, Foreword by Geoffrey Brennan, Hartmut Kliemt, and Robert D. Tollison, 20 vols. (Indianapolis: Liberty Fund, 1999-2002). Vol. 6 Cost and Choice: An Inquiry in Economic Theory.
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Prices, Costs, and Market Equilibrium
What are the relationships between “prices” and “costs” in full market equilibrium? For each participant, expected marginal benefit will be equal to marginal opportunity cost, both measured in terms of the individual’s subjective valuation. All persons are observed to confront uniform relative prices for goods; this is a necessary condition for the elimination of gains-from-trade. Since each participant is in full behavioral equilibrium, it follows that each person must confront the same marginal cost. As a demander, the individual adjusts his purchases to ensure that anticipated marginal benefit equals price. Hence, the anticipated marginal benefits of a good, measured in the numeraire, are equal for all demanders. As a supplier, the individual adjusts his sales to ensure that anticipated opportunities foregone, marginal opportunity cost, equals price. Hence, marginal opportunity cost, measured in the numeraire, is equal for all suppliers.
Prices tend to equal marginal opportunity costs in full market equilibrium. But costs here are fully analogous to marginal benefits on the demand side. Only prices have objective, empirical content; neither the marginal evaluations of the demanders nor the marginal costs of the suppliers (the marginal evaluations of foregone alternatives) can be employed as a basis for determining prices. The reason is that these are both brought into equality with prices by behavioral adjustments on both sides of the market. Prices are not brought into equality with some objectively determinable and empirically measurable phenomena, on either the demand or the supply side of the market.
In this elementary logic of the market process, we are back in the classical model for goods with fixed supply, the model that became the general one with the advent of the subjective-value theory. There is no “theory” of normal exchange value with positive content here. The analysis provides an “explanation” of results, a logic of interaction; it contains no predictive hypotheses.