 The Persistence of ProfitsDennis C. Mueller Chapter 6 in Profits, Deficits and Instability, 1992, pp 82-102 from Palgrave Macmillan Abstract: Abstract Two views about competition exist. The first sees competition as a process for allocating resources to their optimal uses. The price mechanism is the instrument for achieving this goal, and when it functions properly equilibria emerge with prices equated to marginal social costs of production. When it malfunctions, equilibria exist with some prices above marginal costs, and society suffers a welfare loss from the under-consumption of these goods. Such malfunctions are usually attributed to an insufficient number of buyers or sellers. Monopoly is seen as the antithesis of competition. Thus, under the first view, competition is seen as a process for determining prices and quantities, the allocation of resources for a given set of tastes and technological opportunities. At its zenith, competition produces an equilibrium set of prices which induce a Pareto optimal allocation of the economy’s goods and services. Such equilibria are anticipated so long as monopolistic elements are absent. Keywords: Market Share; Federal Trade Commission; Competitive Process; Profit Rate; Advertising Intensity (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-11786-4_6 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-11786-4_6 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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