The Classical Notion of Competition Revisited

Neri Salvadori and Rodolfo Signorino

History of Political Economy, 2013, vol. 45, issue 1, 149-175

Abstract: This article seeks to fill a lacuna within classical economics concerning the process of market price determination in situations of market disequilibrium. To this aim, first we distinguish the classical notion of free competition from the Walrasian notion of perfect competition and we argue that the latter is beset with some theoretical difficulties alien to the former. Second, we reconstruct in some detail Smith’s and Marx’s views concerning market price determination and show that Marx’s extensive use of metaphors and numerical examples foreshadows the modern taxonomy of buyers’ market, sellers’ market, and mixed strategy equilibrium in the capacity space of a standard Bertrand duopoly model. Finally, we highlight similarities and differences between the classical notion of competition and contemporary Bertrand competition models.

Keywords: classical economics; market disequilibrium; competition; Adam Smith; Karl Marx; Bertrand competition models (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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Working Paper: The classical notion of competition revisited (2010)
Working Paper: The classical notion of competition revisited (2010)
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