New Developments on the Oligopoly Front

Abstract

IN MY opinion the two books reviewed in this article represent a welcome major breakthrough on the oligopoly front. These two contributions, which appeared almost simultaneously, though clearly quite independently, have much in common in their basic models and method of approach to the problem. But, fortunately, they do not significantly repeat each other; for, having started from the same point of departure, the authors have followed divergent paths, exploring different implications of the same basic model. Sylos deals almost exclusively with homogeneous oligopoly defined as a situation in which all producers, actual and potential, are able to supply the identical commodity (more generally, commodities that are perfect substitutes for each other) and have access to the very same long-run cost function. He thus focuses on barriers to entry resulting from economies of scale. Bain, on the other hand, also analyzes the effect of competitors being altogether unable to produce perfect substitutes-that is, product-differentiation barriers-or being able to do so only at higher costs--absolute costadvantage barriers. Furthermore, Bain's book is greatly enriched by fascinating empirical data, painstakingly collected