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The classical notion of competition revisited

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  • Salvadori, Neri
  • Signorino, Rodolfo

Abstract

The paper seeks to fill a lacuna within Classical economics concerning the process of market price determination in a short-period equilibrium. To this aim, first we distinguish the Classical notion of free competition from the Walrasian notion of perfect competition and we argue that the latter is beset by some theoretical difficulties alien to the former. Second, we reconstruct in some detail Smith and Marx’s views concerning market price determination and we show that Marx’s extensive use of metaphors and numerical examples foreshadows the modern taxonomy of buyers’ market, sellers’ market and mixed strategy equilibrium in the capacity space of a standard Bertrand duopoly model. Finally, we highlight similarities and differences between the Classical notion of competition and contemporary game-theoretic oligopoly models

Suggested Citation

  • Salvadori, Neri & Signorino, Rodolfo, 2010. "The classical notion of competition revisited," MPRA Paper 22760, University Library of Munich, Germany, revised 17 May 2010.
    • Handle: RePEc:pra:mprapa:22760
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    References listed on IDEAS

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    1. Paul J. McNulty, 1967. "A Note on the History of Perfect Competition," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 395-395.
    2. Samuelson, Paul A, 1978. "The Canonical Classical Model of Political Economy," Journal of Economic Literature, American Economic Association, vol. 16(4), pages 1415-1434, December.
    3. Clarence Morrison, 1998. "Cournot, bertrand, and modern game theory," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(2), pages 172-174, June.
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    5. Vickers, John, 1995. "Concepts of Competition," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 1-23, January.
    6. Heinz Kurz & Neri Salvadori, 2000. "'Classical' Roots of Input-Output Analysis: A Short Account of its Long Prehistory," Economic Systems Research, Taylor & Francis Journals, vol. 12(2), pages 153-179.
    7. Mark Blaug, 1999. "Misunderstanding Classical Economics: The Sraffian Interpretation of the Surplus Approach," History of Political Economy, Duke University Press, vol. 31(2), pages 213-236, Summer.
    8. Kaldor, Nicholas, 1972. "The Irrelevance of Equilibrium Economics," Economic Journal, Royal Economic Society, vol. 82(328), pages 1237-1255, December.
    9. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
    10. Pierangelo Garegnani, 2024. "Value and Distribution in the Classical Economists and Marx," Springer Studies in the History of Economic Thought, in: Roberto Ciccone (ed.), Capital Theory, the Surplus Approach, and Effective Demand, pages 305-340, Springer.
    11. Steedman, Ian, 1984. "Natural Prices, Differential Profit Rates and the Classical Competitive Process," The Manchester School of Economic & Social Studies, University of Manchester, vol. 52(2), pages 123-140, June.
    12. Pierangelo Garegnani, 2024. "The Classical Theory of Wages and the Role of Demand Schedules in the Determination of Relative Prices," Springer Studies in the History of Economic Thought, in: Roberto Ciccone (ed.), Capital Theory, the Surplus Approach, and Effective Demand, pages 297-303, Springer.
    13. Jean Magnan de Bornier, 2001. "Magnan de Bornier on Cournot-Bertrand: A Rejoinder to Clarence Morrison," History of Political Economy, Duke University Press, vol. 33(1), pages 167-174, Spring.
    14. Clarence C. Morrison, 2001. "Magnan de Bornier on Cournot-Bertrand," History of Political Economy, Duke University Press, vol. 33(1), pages 161-165, Spring.
    15. Dumenil, Gerard & Levy, Dominique, 1987. "The Dynamics of Competition: A Restoration of the Classical Analysis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 11(2), pages 133-164, June.
    16. Andrea Lavezzi, 2003. "Smith, Marshall and Young on division of labour and economic growth," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 10(1), pages 81-108.
    17. G. J. Stigler, 1972. "Perfect Competition, Historically Contemplated," Palgrave Macmillan Books, in: Charles K. Rowley (ed.), Readings in Industrial Economics, chapter 7, pages 105-130, Palgrave Macmillan.
    18. Heinz D. Kurz & Neri Salvadori, 2002. "Mark Blaug on the “Sraffian Interpretation of the Surplus Approach”," History of Political Economy, Duke University Press, vol. 34(1), pages 225-236, Spring.
    19. Nicola GIOCOLI, 2005. "Modeling Rational Agents The Consistency View Of Rationality And The Changing Image Of Neoclassical Economics," Cahiers d’économie politique / Papers in Political Economy, L'Harmattan, issue 49, pages 177-208.
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    Cited by:

    1. Saverio M. Fratini & Alessia Naccarato, 2016. "The Gravitation of Market Prices as A Stochastic Process," Metroeconomica, Wiley Blackwell, vol. 67(4), pages 698-716, November.
    2. Signorino, Rodolfo, 2011. "David Ricardo on natural and market prices," MPRA Paper 39212, University Library of Munich, Germany.
    3. Neri Salvadori & Rodolfo Signorino, 2016. "Competition," Chapters, in: Gilbert Faccarello & Heinz D. Kurz (ed.), Handbook on the History of Economic Analysis Volume III, chapter 6, pages 70-81, Edward Elgar Publishing.
      • Salvadori, Neri & Signorino, Rodolfo, 2011. "Competition," MPRA Paper 38387, University Library of Munich, Germany.
    4. Huang, Biao, 2022. "On the Over-determination Problem in a Two Sector Neo-Kaleckian Model," Centro Sraffa Working Papers CSWP56, Centro di Ricerche e Documentazione "Piero Sraffa".
    5. Kiedrowski, Roman, 2018. "Profit rates equalization and balanced growth in a multi-sector model of classical competition," Journal of Mathematical Economics, Elsevier, vol. 77(C), pages 39-53.

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    More about this item

    Keywords

    Classical and neoclassical notions of competition; Adam Smith; Karl Marx; mixed strategies.;
    All these keywords.

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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