Competition, Monopoly, and Differentils of Profit Rates: Theoretical Considerations and Empirical Evidence

This paper discusses the theoretical background and the empirical evidence for the post-Marxian theory of monopoly. Special attention is given to the theory of monopoly capital and the hypothesis that industrial concentration and the rise of large corporations lead to stable and persistent differential profit rates between industries and size classes of firms. The paper begins by comparing the notions of competition that have been developed in part of the post-Marxian literature and both the classical (Smith, Ricardo) and Marxian theories. It emphasizes the difference between Marx's concepts of competition, price and profits and those conceptions of the monopoly capital school. On the basis of this discussion the empirical evidence pertaining to monopoly profits is analyzed. A review of the main empirical studies on monopoly and differential profit rates since the 1950's highlights those aspects which differentiate the two conceptions of competition discussed previously. In the final part of the article the analysis returns to the Marxian theory of competition in order to assess whether the empirical results regarding both differential profit rates between industries and firms and the economic power of large firms constitute a reality contrary to the theory. The conclusion is that the Marxian theory of competition and profits provides a framework consistent with the available data.