Modern Monopolies in Economic Development

Abstract

In an economy which is substantially competitive, the main con­sequences of a few monopolistic situations are the price distortions which have been analysed by the neo-classical economists. The picture changes entirely if monopolistic situations are supposed to be diffuse (we may then speak of a monopolistic economy). The problem of price distortion is then superseded by the problem of the interactions between the strategy of the firm and the dynamics of the economy. We shall call ‘monopolistic’ that behaviour of the firm which is capable of maintaining (in the long run) a profit margin higher than ‘normal’ or of surviving for a long period in spite of having costs higher than is technically and commercially necessary (for instance because of higher wages or of special bonuses granted to persons and bodies inside and outside the firms).

I am indebted to Robin Marris and Terenzio Cozzi who have contributed criticism and advice.