The perfect prices predicted by modern economic theory are actually impossible for any computer or human to mathematically calculate.
April 23, 2026
Original Paper
Existence Is Not Enough: Computability and Competitive Equilibrium
SSRN · 6443180
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The Takeaway
A fundamental gap exists between the theoretical existence of an economic equilibrium and the ability to actually find it. While textbooks claim that markets naturally settle on a balance of supply and demand, the math required to get there is often uncomputable. This means that the central pillars of modern economics might be operationally irrelevant in the real world. Many policies are based on the assumption that markets will eventually reach this perfect state. In reality, we are operating in a system where the correct price might never be discoverable.
From the abstract
Competitive equilibrium theory assures us that supporting prices exist under familiar regularity conditions. In the Arrow-Debreu framework, these prices decentralize efficient allocations in economies satisfying standard convexity assumptions. These existence theorems are among the central achievements of modern economics. This note asks a complementary question: can those prices be discovered by feasible processes of adjustment? Existence alone does not guarantee that anyone-agents, institution