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

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  • Michael Perelman

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.

Suggested Citation

  • Michael Perelman, 1994. "Retrospectives: Fixed Capital, Railroad Economics and the Critique of the Market," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 189-195, Summer.
    • Handle: RePEc:aea:jecper:v:8:y:1994:i:3:p:189-95
    Note: DOI: 10.1257/jep.8.3.189
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.3.189
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    References listed on IDEAS

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    1. Foreman-Peck, J S, 1987. "Natural Monopoly and Railway Policy in the Nineteenth Century," Oxford Economic Papers, Oxford University Press, vol. 39(4), pages 699-718, December.
    2. Parrini, Carl P. & Sklar, Martin J., 1983. "New Thinking about the Marker, 1896–1904: Some American Economists on Investment and the Theory of Surplus Captial," The Journal of Economic History, Cambridge University Press, vol. 43(3), pages 559-578, September.
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    Cited by:

    1. Panayotis Michaelides & John Milios & Angelos Vouldis & Spyros Lapatsioras, 2010. "Emil Lederer and Joseph Schumpeter on Economic Growth, Technology and Business Cycles," Forum for Social Economics, Taylor & Francis Journals, vol. 39(2), pages 171-189, January.
    2. Michael Perelman, 1995. "Retrospectives: Schumpeter, David Wells, and Creative Destruction," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 189-197, Summer.
    3. Javier Campos Méndez & Juan Luis Jiménez González, 2003. "Old and new ideas in Competition Policy," Documentos de trabajo conjunto ULL-ULPGC 2003-06, Facultad de Ciencias Económicas de la ULPGC.
    4. Michaelides, Panayotis G. & Milios, John G. & Vouldis, Angelos, 2007. "Schumpeter and Lederer on Growth, Technology, Credit and Business Cycles," MPRA Paper 74486, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • B19 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Other
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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