Arrow's theory challenges equilibrium models, revolutionizing market dynamics.
The chapter discusses how equilibrium models must consider the process of reaching balance in markets, not just assume it. Kenneth Arrow argues that assuming demand and supply maximization alone doesn't guarantee equilibrium. He emphasizes the need to include dynamics of equilibrium attainment in models, rather than assuming markets are already balanced. Imperfect competition is also needed to address any imbalances before equilibrium is reached.