104 ECONOMIC THEORY OF LEISURE CLASS
namely, the purchasers who estimate the unit highest (Ar to
As) and the sellers who estimate it lowest (B1 to B5).” (Ibid.
P- 499.)
In the second place, “as many of the competitors on each
side will effect an exchange as there are pairs resulting from a
juxtaposition of the competitors according to the descending
order of their exchange-capacity, within which pairs the pros-
pective purchaser estimates the article at a higher price than
the seller.” 1
In the third place: “In a mutual competition between all
parties, the market price will be fixed between an upper limit
constituting the evaluations of the last purchaser available
for exchange and that of the most exchange-capable of the
excluded prospective sellers, and a lower limit fixed by the
evaluations of the least exchange-capable of the sellers who
effect an exchange and the most exchange-capable of the pros-
pective buyers excluded from exchange.” (Ibid., p. 501.) Tak-
ing these pairs as “limiting pairs” we obtain the following
formulation of the price law: “The magnitude of the market
price is limited and fixed by the magnitude of the subjective:
evaluations of the two limiting pairs.” (Ibid., p. 501.)
So much for the mechanism of competition, i.e., the process
of price formation considered from the formal aspect. Es-
sentially this is nothing more or less than an amplified formula-
tion of the old law of supply and demand. Therefore this formal
aspect of the matter is less interesting than its content, the
quantitative determination of the exchange process. But let
us insert a third observation. In determining the “general
rules” moving those who take part in the exchange, Bohm-
Bawerk formulates the following three “rules”: “He [the
candidate in the exchange process] will in the first place not
exchange at all unless the exchange brings advantage to him;
he will, in the second place, rather exchange with a large ad-
vantage than with a small one; and in the third place, he will
rather exchange with slight advantage than with none at all.”
(Ibid. p. 489.) The first of these three rules is fallacious, for
there are cases in which the sellers accept an exchange though
it may mean a loss, recognising the principle that a small loss
is better than a big one. Such is the case, for instance, when
