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The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory

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  • Antonella Rancan

Abstract

Paolo Sylos Labini’s Oligopoly Theory and Technical Progress (1957) is considered one of the major contributions to entry-prevention models, especially after Franco Modigliani’s famous formalization. Nonetheless, Modigliani neglected Sylos Labini’s major aim when reviewing his work (1958), particularly his demonstration of the dynamic relation between industrial concentration and economic development. Modigliani addressed only Sylos’ microeconomic analysis and the determination of the long-run equilibrium price and output, concentrating on the role played by firms’ anticipations. By doing so he shifted attention from Sylos' objective analysis to a subjective approach to oligopoly problem. This paper discusses Sylos’ and Modigliani’s differing approaches, derives the origin of the Sylos postulate and sets Modigliani’s interpretation of Sylos’ oligopoly theory in the context of his 1950s research into firms’ behaviour under uncertainty.

Suggested Citation

  • Antonella Rancan, 2012. "The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory," Center for the History of Political Economy Working Paper Series 2012-08, Center for the History of Political Economy.
  • Handle: RePEc:hec:heccee:2012-8
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    References listed on IDEAS

    as
    1. Franco Modigliani, 1959. "New Developments on the Oligopoly Front: Reply," Journal of Political Economy, University of Chicago Press, vol. 67, pages 418-418.
    2. Franco Modigliani, 1958. "New Developments on the Oligopoly Front," Journal of Political Economy, University of Chicago Press, vol. 66, pages 215-215.
    3. Donald E. Farrar & Charles F. Phillips & Jr., 1959. "New Developments on the Oligopoly Front: A Comment," Journal of Political Economy, University of Chicago Press, vol. 67, pages 414-414.
    4. Osborne, D K, 1973. "On the Rationality of Limit Pricing," Journal of Industrial Economics, Wiley Blackwell, vol. 22(1), pages 71-80, September.
    5. R. F. Harrod, 1934. "Doctrines of Imperfect Competition," The Quarterly Journal of Economics, Oxford University Press, vol. 48(3), pages 442-470.
    6. Alessandro Roncaglia, 2007. "Il pensiero economico di Paolo Sylos Labini," Economia & lavoro, Carocci editore, issue 3, pages 1-23.
    7. H. F. Lydall, 1955. "Conditions Of New Entry And The Theory Of Price," Oxford Economic Papers, Oxford University Press, vol. 0(3), pages 300-311.
    8. Franklin M. Fisher, 1959. "New Developments on the Oligopoly Front: Cournot and the Bain-Sylos Analysis," Journal of Political Economy, University of Chicago Press, vol. 67, pages 410-410.
    9. H. Neisser, 1957. "Oligopoly as a Non-Zero-Sum Game," Review of Economic Studies, Oxford University Press, vol. 25(1), pages 1-20.
    10. Richard Arena, 2007. "La théorie de l'oligopole de Sylos Labini : diversité des interprétations et prolongements possibles," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 4-4.
    11. F. H. Hahn, 1955. "Excess Capacity And Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 0(3), pages 229-240.
    12. George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55, pages 432-432.
    13. J. R. Hicks, 1954. "The Process Of Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 6(1), pages 41-41.
    14. Roger Sherman & Thomas D. Willett, 1967. "Potential Entrants Discourage Entry," Journal of Political Economy, University of Chicago Press, vol. 75, pages 400-400.
    15. Pyatt, F Graham, 1971. "Profit Maximisation and the Threat of New Entry," Economic Journal, Royal Economic Society, vol. 81(322), pages 242-255, June.
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    Keywords

    Modigliani; Sylos Labini; Sylos postulate; Oligopoly Theory;

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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