A World of Monopolies

IT is customary, in setting out the principles of economic theory, to open with the analysis of a perfectly competitive world, and to treat monopoly as a special case. It has been the purpose of the foregoing argument to show that this process can with advantage be reversed and that it is more proper to set out the analysis of monopoly, treating perfect competition as a special case. We have been concerned, however, only with the problem of price and output for a single industry considered in isolation, and it must be conceded that for problems connected with the distribution of resources between different uses, and the distribution of the proceeds of industry between the factors of production, the assumption of competition forms a more useful starting point. For instance, we have already found it necessary to appeal to perfect competition in order to find a criterion of exploitation. But if our theory of value is to be based upon the conception of monopoly it is obviously necessary to discover what becomes of the theory of distribution upon the basis of monopoly. It is therefore necessary to attempt the analysis of a world in which every commodity is produced under monopoly. Moreover, this problem obviously has some practical relevance in the present age.