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Adam Smith on Monopoly Theory. Making good a lacuna


  • Salvadori, Neri
  • Signorino, Rodolfo


The paper analyzes Adam Smith’s views on monopoly focusing on Book IV and V of The Wealth of Nations and argues that Smith has left his analysis of monopoly in an embryonic form while the majority of scholars have assessed it starting from premises different from those, actually though implicitly, used by Smith to approach this subject. We show that Smith makes use of the word ‘monopoly’ to refer to a heterogeneous collection of market outcomes, besides that of a single seller market, and that Smith’s account of monopolists’ behavior is richer than that provided by later monopoly theorists.

Suggested Citation

  • Salvadori, Neri & Signorino, Rodolfo, 2012. "Adam Smith on Monopoly Theory. Making good a lacuna," MPRA Paper 38411, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38411

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    References listed on IDEAS

    1. de Roover, Raymond, 1958. "The Concept of the Just Price: Theory and Economic Policy," The Journal of Economic History, Cambridge University Press, vol. 18(04), pages 418-434, December.
    2. Blaug,Mark, 1997. "Economic Theory in Retrospect," Cambridge Books, Cambridge University Press, number 9780521577014, May.
    3. Manuela Mosca, 2008. "On the origins of the concept of natural monopoly: Economies of scale and competition," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 15(2), pages 317-353.
    4. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, March.
    5. repec:ucp:bkecon:9780226199993 is not listed on IDEAS
    6. Anderson, Gary M & Tollison, Robert D, 1982. "Adam Smith's Analysis of Joint-Stock Companies," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1237-1256, December.
    7. Gary Anderson & Robert D. Tollison, 1983. "Apologiae for Chartered Monopolies in Foreign Trade, 1600–1800," History of Political Economy, Duke University Press, vol. 15(4), pages 549-566, Winter.
    8. Stigler, George J, 1982. "The Economists and the Problem of Monopoly," American Economic Review, American Economic Association, vol. 72(2), pages 1-11, May.
    9. Garegnani, Pierangelo, 1983. "The Classical Theory of Wages and the Role of Demand Schedules in the Determination of Relative Prices," American Economic Review, American Economic Association, vol. 73(2), pages 309-313, May.
    10. Salvadori, Neri & Signorino, Rodolfo, 2011. "Competition," MPRA Paper 38387, University Library of Munich, Germany.
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    More about this item


    Competition; Monopoly; Classical Economics; Adam Smith;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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