Oligopoly and Technical Progress

by P. Sylos-Labini

First published in 1962, this study explores the theoretical problems of price formation and price variations under oligopoly, and the long-run consequences of the spread of oligopolies on employment, investment and the national income. The revised edition extends aspects of the authors integrated microeconomic and macroeconomic analysis of market forms and price variations. A new section explicitly treats the growth of firms and evaluates empirical criticisms of the stagnation theory advanced in the first edition. The author's " Static and Dynamic Analysis" has been appended to this reprint edition.

"The merit of the book lies in its insistence that ... for undifferentiated oligopoly, theory does not need conjectural reaction curves." — Journal of Political Economy

"Its language and insights will become an integral part of economic theory and analysis." — Library Journal

237 pages, Hardcover

First published January 1, 1969

Reviews

[Cameron Wilson · Rating 5 out of 5]

"Individually, the performance of large oligopolistic firms may be, and undoubtedly often is, superior to that of competitive firms; but in the social context they create new problems. If we want to discover the new problems and new tendencies which are associated with oligopoly and are alien to competition, we may legitimately compare the behavior of firms in conditions of oligopoly (and monopoly) and in conditions of competition. Only in these terms is it logically sound and analytically useful to compare firms operating under different market forms. If we speak of the new problems of the oligopolistic era, we do not wish to imply[...]that we have any nostalgia for what Schumpeter calls the imaginary golden age of the past, when competition reigned supreme and all was well in the best of all possible worlds. First of all, we should refer not to neoclassical "perfect competition," which never existed anywhere, but to classical competition, conceived as the dynamic process characterized by relative ease of entry of new firms. Second, we have to remember that although, historically, certain problems and tendencies were absent or had less weight in the age of competition, it knew others which we are spared---much more poverty and the ruthless exploitation of female and child labor, to name only two." --p.171

"Even apart from traditional theory, the idea that demand influences prices seems to respond to simple common sense. Nevertheless, common sense can be dangerous; if technology is unchanged and returns are constant, the pressure of demand would cause an increase in output, not in prices. The idea, however, is that when production approaches full capacity, the rise in prices is not as much caused by increases in costs as is it is the result of relative scarcity (two aspects which should be well distinguished). Yet this way of reasoning neglects the fact that in an open economy, demand, beyond a certain point, can move abroad; only when the degree of utilization approaches full capacity in all major industrialized countries does the scarcity of certain industrial products become truly relevant" --p.251

This is a good early macro-micro synthesis in a dynamic, historically grounded setting. Considering the serious lack of the above in the last 50 years, this worth revisiting over more recent books.