Quality and Competition: An Essay in Economic Theory

Quality and Competition: An Essay in Economic Theory

Quality and Competition: An Essay in Economic Theory

Quality and Competition: An Essay in Economic Theory

Excerpt

The basic ideas in this book are quite simple. But they are the sort of ideas that may not be immediately acceptable to most economists, for they collide sufficiently with orthodox economic thinking to require of the reader some rather fundamental -- and perhaps painful -- readjustments in his approach to the study of economic behavior and market structures and their welfare implications. For this reason the book cannot be as brief as the writer would like to make it, nor as easy reading.

The impetus which has brought it into being has been the writer's conviction that a serious gap exists in the structure of economic theory. For almost as many decades as economics has existed, economists have been so preoccupied with questions of price determination and price-output relationships that the equally interesting and important phenomena relating to the "product" or "quality" variable have received but scant attention. The result has been that economists now have at their disposal a well-integrated body of analysis dealing with price behavior in various types of markets, but have no comparable body of analysis to guide them when studying product behavior.

This shortcoming cannot be lightly dismissed. A complete understanding of competitive markets involves an understanding of both the price-adjustment aspect and the product-adjustment aspect, and requires a framework of analysis comprehensive enough to embrace both aspects. Until such a framework is built, the economist who is concerned with the extent and character of competitive forces in capitalist markets must hobble along with only a partial theory in his analytical toolbox -- a "theory of competitive price" -- instead of a complete, well-rounded "theory of competition."

The present book represents a modest attempt to work toward the formulation of a more comprehensive theory, Its main concern . . .

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