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Week 3: Neoclassical school: Edward Chamberlin (1899-1967) Joan Robinson…
Week 3: Neoclassical school: Edward Chamberlin (1899-1967) Joan Robinson (1903 1983)
Chamberlin-Monopolistic competition
Imperfect competition (Predecessors: Cournot, Wicksell)
The Theory of Monopolistic Competition (1933)
Product differentiation
Advertising
Product development
SR: monopolistic profits, since price>MC
Neither purely competitive nor purely monopolistic
LR: no profits due to free entry
Robinson-Imperfect competition
The Economics of Imperfect Competition (1933)
Similarities to Chamberlin:
Free entry, no long-run profits
Mixture between pure competition and pure monopoly
Product differentiation, competition from close substitutes
Differences:
No discussion on advertising/product development
More attention to consequences for price formation:
i. Monopsony – single buyer market
ii. Price discrimination
Conclusion: Neo-classicicsts extended existing economic theories by:
Attaching more value to role of money
Extended marginal analysis to different market structures
Considering both demand and supply elements