Theory of Markets
Theory of Markets
This book is a revised version of a Ph.D. thesis that was submitted to Harvard University in November 1952.
In this work, a general study is made of pricing in three different markets -- perfect competition, perfect monopoly, and imperfect competition. The main part of the book is, however, concerned with oligopoly. The solutions of these markets offered by Cournot, Smithies, Chamberlin, Stackelberg, Fellner, and Robinson are presented mathematically. My own version of the theory of rational pricing in oligopoly is then given. Conceptually, my solution is akin to Game Theory in that it gives a set of rules governing the behavior of the sellers for every conceivable situation.
The mathematics used in this book is elementary and involves only the elements of calculus and of matrix algebra, and the indifference curves technique, which is used for characterizing the rational behavior in the case of two sellers. Readers without training in mathematics may omit Sections 3 to 12. This study is intended for readers who have already been initiated into the theories of markets and have acquainted themselves with such basic textbooks as Chamberlin Theory of Monopolistic Competition and Triffin Monopolistic Competition and General Equilibrium.
I wish to express my gratitude to Professor Wassily W. Leontief for suggesting the subject matter to me and for valuable advice and suggestions, and to Dr. Carl Kaysen for reading and criticizing the manuscript. I am greatly indebted to Dr. Freddy Ba Hli, my friend and former classmate in Burma, a student at the Massachusetts Institute of Technology at the time the original thesis was written, who followed the manuscript as it evolved, chapter by chapter, and whose suggestions were many.
I am grateful to the Government of the Union of Burma for its grant of a State Scholarship which enabled me to study in . . .