In an earlier post, I discussed how transparency is the necessary and sufficient condition for the invisible hand of the market to operate properly. One might say that transparency is the foundation on which markets are built.
I asserted that it is only when buyers have access to all the useful, relevant information in an appropriate, timely manner that the invisibile hand of the market can properly set market clearing prices.
The clear corollary to this statement is that any form of opacity interferes with the ability of the invisible hand to properly set market clearing prices. Opacity is the ultimate market imperfection.
With the help of my sons, I have been able to document that the statement that transparency is the necessary and sufficient condition for the the invisible hand of the market to operate properly does not appear in Economics 101 - in the textbooks, lectures or discussion sections.
My question to readers of this blog is who has made this observation prior to your humble blogger?
Once you hear transparency related to the invisible hand, it is obvious that it is both a necessary and sufficient condition. The question is, who first drew the connection between what transparency provides and how the invisible hand operates?
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