Wicksell, Bowley, Schumpeter and the Dolls’ Eyes

Abstract

This article aims at drawing attention to Wicksell’s last important contribution to economic theory, namely his model for bilateral monopoly.¹ This aspect of Wicksell’s work has not received its proper attention, mainly because the model that should have been called the Wicksell model is known in the literature as the Bowley model. For half a century this model—implying a determinate solution of the bilateral monopoly problem—has competed with models implying that this problem is indeterminable on economic grounds, at least as regards price. The most recent research in this area, however, has given at least partial support to the Wicksellian idea that bilateral monopoly has a determinate solution, in that a completely determinate solution can be established on the basis of economic factors alone for many situations.