• DOI:10.1086/254595
• Corpus ID: 154388262

Robinson's Economics of Imperfect Competition

@article{Schumpeter1934RobinsonsEO,
  title={Robinson's Economics of Imperfect Competition},
  author={Joseph Alois Schumpeter and A. J. Nichol},
  journal={Journal of Political Economy},
  year={1934},
  volume={42},
  pages={249 - 259}
}

• J. Schumpeter, A. J. Nichol
• Published 1 April 1934
• Economics
• Journal of Political Economy

COMPETITION' IT CANNOT be repeated too often that the case of perfect competition owes the fundamental importance which it always had and still has in economic theory to certain properties characteristic of it and neither to any tendency in the facts to conform to it nor any "desirability" of the state of things it depicts. From the beginning of scientific analysis of economic phenomena until comparatively recent times most economists would, it is true, have based the claims of free competition on the latter two grounds, the first of which we now all agree to be untenable, while the second is simply another illustration of how difficult it is in our field to acquire a scientific habit of mind. Their work, however, is not invalidated by these facts. For by virtue of those properties the theory of perfect competition still remains a useful and almost indispensable background with which to compare, and therefore by which to understand, any other situation, however far removed it may be from it. In view of the fact that some of our institutionalist friends are still known to harbor a belief that a typical theorist believes in free competition as a fact or, still worse, that he "advocates" it, it may even not be superfluous to point out that the theory of free competition is the only avenue to a rational theory of planning and of centralistic socialism. In the course of the nineteenth century the theory of another case emerged with the slowness characteristic of a science which has proved so little attractive to true scientific talent: the "model" of free competition was supplemented by a "model" of perfect monopoly. That is to say, the two were set up side by side without much connection between them, the implication being that monopoly was in the nature of an exception. This is not true of Cournot, the great father of the theory who, on the contrary, made it the starting-point from which to proceed towards the other limiting case. But it is eminently true of Marshall and Edgeworth, who also afford examples of the common practice of the time of looking at the whole stretch of ground between the two limiting cases as rather unsafe and incapable of yielding determinate results. As the maioritv of practical case-s lip on that stretch