The paper of which this is an enlarged and revised version was read at a joint Round
Table of the American Economic Association and the Econometric Society, during the
meetings at Philadelphia, December, 1939. Where one of the conditions of perfect
competition is absent, the presence of others may lead to greater rather than less
imperfection. Long-run curves of individual demand and cost are flatter than commonly
represented, and the imperfections of competition correspondingly less. Industry
subject to fluctuating demand requires prices in excess of short-run marginal cost.
Favorable conditions appear to include a sloping individual demand curve, and some
uncertainty whether a reduction of price will be promptly met. With standardized
products, a chaotic market tends toward ruinous competition. Pure oligopoly is seldom
found; the important case being that of openly-quoted prices with varying amounts
of deviations on actual sales. Standard products with sloping individual demand curves
are also possible. While extreme quality differentials approach monopoly, more moderate
ones may be workably competitive, especially with further growth of closer substitutes
and better knowledge of qualities on the part of buyers.
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