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Adam Smith on Monopoly Theory. Making good a lacuna

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  • Salvadori, Neri
  • Signorino, Rodolfo

Abstract

The paper analyzes Adam Smith’s views on monopoly focusing on Book IV and V of The Wealth of Nations and argues that Smith has left his analysis of monopoly in an embryonic form while the majority of scholars have assessed it starting from premises different from those, actually though implicitly, used by Smith to approach this subject. We show that Smith makes use of the word ‘monopoly’ to refer to a heterogeneous collection of market outcomes, besides that of a single seller market, and that Smith’s account of monopolists’ behavior is richer than that provided by later monopoly theorists.

Suggested Citation

  • Salvadori, Neri & Signorino, Rodolfo, 2012. "Adam Smith on Monopoly Theory. Making good a lacuna," MPRA Paper 38411, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38411
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    File URL: https://mpra.ub.uni-muenchen.de/38411/1/MPRA_paper_38411.pdf
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    References listed on IDEAS

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    1. Manuela Mosca, 2008. "On the origins of the concept of natural monopoly: Economies of scale and competition," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 15(2), pages 317-353.
    2. Raymond de Roover, 1955. "Scholastic Economics: Survival and Lasting Influence from the Sixteenth Century to Adam Smith," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(2), pages 161-190.
    3. Anderson, Gary M & Tollison, Robert D, 1982. "Adam Smith's Analysis of Joint-Stock Companies," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1237-1256, December.
    4. 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.
    5. Heinz D. Kurz & Neri Salvadori (ed.), 1998. "The Elgar Companion to Classical Economics," Books, Edward Elgar Publishing, volume 0, number 851.
    6. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
    7. Rashid, Salim, 1980. "The Policy of Laissez-Faire during Scarcities," Economic Journal, Royal Economic Society, vol. 90(3593), pages 493-503, September.
    8. repec:ucp:bkecon:9780226199993 is not listed on IDEAS
    9. Raymond de Roover, 1951. "Monopoly Theory Prior to Adam Smith: A Revision," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(4), pages 492-524.
    10. 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.
    11. de Roover, Raymond, 1958. "The Concept of the Just Price: Theory and Economic Policy," The Journal of Economic History, Cambridge University Press, vol. 18(4), pages 418-434, December.
    12. Blaug,Mark, 1997. "Economic Theory in Retrospect," Cambridge Books, Cambridge University Press, number 9780521577014, September.
    13. Gary Anderson & Robert D. Tollison, 1983. "Apologiae for Chartered Monopolies in Foreign Trade, 1600–1800," History of Political Economy, Duke University Press, vol. 15(4), pages 549-566, Winter.
    14. Stigler, George J, 1982. "The Economists and the Problem of Monopoly," American Economic Review, American Economic Association, vol. 72(2), pages 1-11, May.
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    Cited by:

    1. Bianchi, Patrizio & Labory, Sandrine, 2022. "Dynamic gravitation and structural dynamics: From Smith to Modern theory," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 90-98.
    2. 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".

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    More about this item

    Keywords

    Competition; Monopoly; Classical Economics; Adam Smith;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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