"Even before I came to Chicago, I had gotten interested in the existence of dispersion of prices under conditions which economic theory said would yield a single price"
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Stigler is confessing a kind of productive heresy: he got hooked not on elegant theory, but on the embarrassing places where it didn’t behave. Economic models love clean endings. Under “perfect” conditions - full information, frictionless trade, lots of buyers and sellers - the price should collapse into one number. Stigler’s fascination with “dispersion” is a pointed reminder that the world keeps smearing that number into a range, and that the smear itself is the story.
The phrasing is tellingly modest, almost offhand: “had gotten interested,” “existence of dispersion.” It’s the tone of a scientist noticing a stain on the lab coat and deciding the stain matters more than the brochure. Subtext: economists were too comfortable treating deviation as noise. Stigler is signaling a methodological pivot: take the deviation seriously enough to build theory around it.
Contextually, this is Chicago before it becomes a brand name for market fundamentalism in popular caricature. Stigler, a core Chicago figure, isn’t saying markets fail; he’s saying markets are costly to operate. Price dispersion is the fingerprint of search costs, imperfect information, time, geography, and bargaining - the mundane mechanics that standard theory hand-waves away. His later work on the economics of information turns this curiosity into a weapon: if information is expensive, then “one price” isn’t the default; it’s an achievement.
There’s also a quiet institutional critique embedded here. If the textbook predicts a single price and the data stubbornly refuses, the problem isn’t necessarily the market. It may be the textbook’s refusal to price the act of finding the price.
The phrasing is tellingly modest, almost offhand: “had gotten interested,” “existence of dispersion.” It’s the tone of a scientist noticing a stain on the lab coat and deciding the stain matters more than the brochure. Subtext: economists were too comfortable treating deviation as noise. Stigler is signaling a methodological pivot: take the deviation seriously enough to build theory around it.
Contextually, this is Chicago before it becomes a brand name for market fundamentalism in popular caricature. Stigler, a core Chicago figure, isn’t saying markets fail; he’s saying markets are costly to operate. Price dispersion is the fingerprint of search costs, imperfect information, time, geography, and bargaining - the mundane mechanics that standard theory hand-waves away. His later work on the economics of information turns this curiosity into a weapon: if information is expensive, then “one price” isn’t the default; it’s an achievement.
There’s also a quiet institutional critique embedded here. If the textbook predicts a single price and the data stubbornly refuses, the problem isn’t necessarily the market. It may be the textbook’s refusal to price the act of finding the price.
Quote Details
| Topic | Knowledge |
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