TITLE:
Value Concept and Economic Surplus: A Suggested Reformulation
AUTHORS:
Truong Hong Trinh
KEYWORDS:
Value Concept, Value Creation, Market Equilibrium, Surplus Concept, Eco-nomic Welfare
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.6,
August
22,
2019
ABSTRACT: Value concept and economic surplus are very
important in explaining value creation and value distribution in the economy.
From the value creation perspective, this paper explores the value concept to
understand the relationship between price and value for a commodity in the
market, in which value is created in the consumption, and price has a role in
value distribution between firms and customers. Theoretical models are
developed to identify the supply functions on the logic of maximizing behaviors
in the market. The numerical experiments are used to conduct the value balance
between the firm and the customer, the value balance is also a necessary
condition for market equilibrium including price equilibrium and value
equilibrium. The study result reveals that economic surplus is reformulated
under market equilibrium, but it is measured upon the maximizing behaviors of
firms and customers in the market. The paper contributes to the development of
value theory that provides a clear understanding of market behavior and welfare
analysis in the economy.