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The second volume in Liberty Fund's The Collected Works of Israel M. Kirzner series,Market Theory and the Price System was published in 1963 as Kirzner's first (and only) textbook. This volume presents an integrated view of Austrian price theory. The basic aim of Market Theory is to utilize the tools of economic reasoning to explain the market process. The unique framework Kirzner develops for microeconomic analysis, following Mises and Hayek, examines errors in decision-making, entrepreneurial profit, and competition as a process of discovery and learning.

"DURING the past few years a number of competently written textbooks on price theory have appeared. The author's excuse for adding yet another book to the elementary literature in this field is that his approach, while in no sense original, presents the subject in an entirely different light.
The approach adopted in this book views the market as a process of adjustment. In this process individual market participants are being forced continually to adjust their activities according to the patterns imposed by the activities of others. Market theory then consists essentially in the analysis of these step-by-step adjustments and of the way the information required for these adjustments is communicated. Equilibrium positions are not, as in other books, treated as important in themselves. They are rather seen as merely limiting cases where the market process has nothing further to do, all activities being already mutually adjusted to the fullest extent. Despite the importance attached to the implications of the approach adopted here, users of this book will find relatively few major substantive departures from price theory as it is usually presented. The principal areas where major differences will be found arise out of the drastically reduced attention paid to perfect competition. Presuming the basic course in general economics, this book is designed for an undergraduate course in intermediate price theory.
For the rest, an author can hardly hope to have escaped revealing his own proclivities, biases, and predilections. Determined efforts have been made to subordinate geometry to economic reasoning. Whatever the author may have learned from Marshall, Edgeworth, and J. B. Clark, this book probably will reveal that he has learned more from Menger, Böhm-Bawerk, and Wicksteed.
Besides his indebtedness to the literature, the author must acknowledge much kind help received from several persons during the preparation of this book. To his teacher Ludwig von Mises, above all, he owes his appreciation of the market process. In addition to reading the finished manuscript, Professor Mises offered many helpful suggestions during its completion. It is with deep pleasure that the author dedicated this volume to him upon the attainment of his eightieth year."

Israel M. Kirzner

Israel Meir Kirzner (Yisroel Mayer Kirzner) (1930) is a leading economist in the Austrian School.

After studying with the University of Cape Town, South Africa in 1947-48 and with the University of London External Programme in 1950-51, Kirzner received his B.A. summa cum laude from Brooklyn College in 1954, an MBA in 1955 and Ph.D. from New York University in 1957 (studying under Ludwig von Mises).

Kirzner's major work is in the economics of knowledge and entrepreneurship and the ethics of markets. He is emeritus professor of economics at New York University, and is a leading authority on Ludwig von Mises’' thinking and methodology in economics. Kirzner's research on entrepreneurship economics is also widely recognized In 2006, Kirzner received the Global Award for Entrepreuneurship Research "for developing the economic theory emphasizing the importance of the entrepreneur for economic growth and the functioning of the capitalist process."

No other economist in recent times has been so closely identified with Austrian School of economics as Israel M. Kirzner.