Hoarding and the competitive equilibrium

Competition is generally regarded as sufficient to insure equilibrium at full employment. Hoarding is receiving increased attention, but apparently there is failure to regard it as a limitation on the doctrine of competition. Hansen's point that lack of competition is essential to validity of Keynes's position. Under perfect competition, outgo must be recovered in receipts in order to maintain equilibrium, hence hoarding will destroy equilibrium. Competition cannot correct situation. Price cutting necessary to effect sales must be in excess of any reduction in costs, since a portion of cost outlay is hoarded by recipients. Price declines may overcome disposition to hoard, especially if new bottom be reached; but new level likely to be due to non-competitive forces. Need for making hoarding integral part of economic theory augmented by large-scale industry and inequality in personal incomes. Flexible prices very important, but not enough.