E. H. Chamberlin: The Origins and Development of Monopolistic Competition

Abstract

The Preliminary Argument The fifteen years following the end of the Great War saw considerable activity amongst economists concerned with competitive structures and the “firm”. As has been argued elsewhere much of this work may be interpreted as an attack on Marshall's treatment of the subject with a view to replacing it by a more “rigorous” and formal analysis. E. H. Chamberlin to a very large extent stands apart from these developments, as he makes plain in the “Origin and Early Development of Monopolistic Competition Theory” (1961). Serious work on his thesis apparently began in 1924, was largely completed in 1926 and the study filed in the following year. This means that Chamberlin's “discovery” of the curves of marginal cost and marginal revenue was made quite independently of his English and German colleagues. Further, as Chamberlin himself made clear, the thesis had no link either with Sraffa or the Symposium of 1931: “Nor did the Book itself attack Marshall…on any of the issues there involved” (ibid., p. 532). Indeed, he always insisted that his work was an attack “not on Marshall, but on the theory of perfect competition” (ibid., p. 540). He might have added that Monopolistic Competition is essentially Marshallian both in its style of reasoning and in the pre‐occupation with realism; a pre‐occupation which led Chamberlin to play down the operational significance of the marginal curves while recognising their importance in a technical sense (1957, pp. 274–76).