The rise and fall of monopolistic competition revolution |
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Authors: | Lefteris Tsoulfidis |
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Institution: | (1) Department of Economics, University of Macedonia, 156 Egnatia Street, PO Box 1592, 54006 Thessaloniki, Greece |
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Abstract: | The widespread idea among economists is that monopolistic or imperfect competition is a set of realistic models that were
invented in the 1930s and their purpose was to fill the gap between the polar and, at the same time, hypothetical models of
perfect competition and pure monopoly. The main argument of this paper is that the monopolistic competition revolution set
in motion a reaction—partly driven by methodological considerations, partly ideological—that ultimately led to the restoration
of perfect competition, as the benchmark for evaluating market outcomes. In the end, monopolistic competition eclipsed, and
perfect competition from the fridges of economic analysis that was up until the 1920s was placed to the very core of microeconomic
model-building.
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Keywords: | Sraffa Perfect competition Monopolistic competition |
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