International Competition and the Rate of Profit

Abstract

Our central concern with the link between monopoly power and the distribution of income must obviously take account of changes in the degree of international competition. Thus the impact on the degree of monopoly (price—cost margins) of rising domestic concentration could be nullified by growing international competition in both domestic and foreign markets as these markets become more open due either to the removal of restrictions on imports or to declining transportation costs. At first glance it might appear that such developments would lead to an unambiguous reduction in the degree of monopoly and thereby to a reduction in the share of profits. However, there are various objections to such an interpretation. Let us start our examination of this question by considering the generalisation of the degree of monopoly model which was presented in Chapter 2.