Economics Dictionary of ArgumentsHome
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| Perfect competition: Perfect competition is a market structure where numerous small firms sell identical products, no single firm can influence prices, and there is free market entry and exit. Buyers and sellers have perfect information, and resources are fully mobile. In the long run, firms earn normal profits as prices equal marginal costs. See also Competition, Pure competion, Markets._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Joseph A. Schumpeter on Perfect Competition - Dictionary of Arguments
Sobel I 19 Perfect competition/Schumpeter/Sobel/Clemens: In a nutshell, Schumpeter's assessment leads him to conclude: "In this respect, perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal effciency" (CSD(1): 106). >Competition/Schumpeter, >Innovation/Schumpeter, >Entrepreneurship/Schumpeter. Schumpeter's alternative view is that entrepreneurial innovation creates temporary monopoly power, and profits, and the quest for such profits is the driving force behind the process repeating itself through time, producing long-run economic development as large firms replace one another in industries that are not really highly competitive at any point in time. Over the long term, it is these industries dominated by larger firms that create more progress and prosperity than the ones that are normally considered "perfectly competitive". In his book Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, Volume 1 (BCI)(2) he asks readers to visualize an entrepreneur who ... carries out an innovation ... that his receipts will exceed his costs. The difference we shall call Entrepreneurs' Profit, or simply Profit. It is the premium put upon successful innovation in capitalist society and is temporary by nature: It will vanish in the subsequent process of competition and adaption. (BC1(2): 105) 1. Schumpeter, Joseph A. (1942). Capitalism, Socialism, and Democracy [CSD]. Harper & Brothers. 2. Schumpeter, Joseph A. (1939). Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, Volume 1 [BC1]. McGraw-Hill Book Company._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconSchum I Joseph A. Schumpeter The Theory of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge/MA 1934 German Edition: Theorie der wirtschaftlichen Entwicklung Leipzig 1912 Sobel I Russell S. Sobel Jason Clemens The Essential Joseph Schumpeter Vancouver 2020 |
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