ABSTRACT
An institutionalist approach, whether to pricing or to some other aspect of economics, requires that one adopt an extended time frame so that whatever changes are occurring in the relevant set of social institutions can be taken into account. There are two distinctly different types of markets, with the process by which prices are determined different in each. As agricultural economies first succeeded in generating a marketable surplus, commodity markets were likely to emerge. The economic system can itself be further divided into a subsystem of production and a subsystem of consumption. The latter consists of the household sector and the government and not-for-profit sector. Without a production subsystem, the economy would perforce be parasitical. Once an input-output model of the economic system has been specified, along with the types of institutions that characterize an advanced market economy, it is possible to demonstrate two essential points about the set of prices represented by the P vector.
