Retrospectives: Fixed Capital, Railroad Economics and the Critique of the Market

Michael Perelman

Journal of Economic Perspectives, 1994, vol. 8, issue 3, 189-195

Abstract: Where average fixed costs are large compared to marginal costs, competition will drive industry into bankruptcy. During the last century, the chaos that competition created within the railroad industry caused many prominent U.S. economists to reject the market in favor of trusts, cartels, and monopolies. They created the American Economic Association to counter the prevailing laissez faire theory. Nonetheless, some, such as J. B. Clark, still wrote in favor of abstract laissez to counter socialist and populist agitation.

JEL-codes: B19 L92 (search for similar items in EconPapers)
Date: 1994
Note: DOI: 10.1257/jep.8.3.189
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Citations: View citations in EconPapers (5)

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