Beyond Competition: The Economics of Mergers and Monopoly Power

Beyond Competition: The Economics of Mergers and Monopoly Power

Beyond Competition: The Economics of Mergers and Monopoly Power

Beyond Competition: The Economics of Mergers and Monopoly Power

Synopsis

Besides providing a valuable supplement for courses in industrial organization and intermediate microeconomics, this text should appeal to scholars interested in recent developments in monopoly theory.

Excerpt

As economics becomes increasingly fragmented into independent fields, there are at least two unifying concepts: supply and demand, and monopoly power. This is a book about power; one that supplements a strong microeconomic analysis with historical examples and empirical evidence.

Monopoly power is a recurring theme in economics, forming a bridge between the early writings of Adam Smith and the modern empirical analyses of today. The concept is widely used in industrial relations, trade theory, urban and regional economics, money and banking, and macroeconomics, and it is nearly indispensable for industrial organization, economic history, and rnicroeconomics.

This text offers a comprehensive examination of monopoly power in its many different dimensions. Beginning with its classical origins, the book traces its evolution through Marxist, neoclassical, and post- Keynesian schools. During its formative years, major contributions were made by Abba Lerner, Michal Kalecki, Nicholas Kaldor, Joan Robinson, Edward Chamberlin, Paul Sweezy, Joe Bain, and John Kenneth Galbraith. From there, the book goes on to define monopoly and economic power in relation to markups and profits, thus providing an essential microeconomic foundation.

Other chapters survey the empirical investigations that confirmed the existence of monopoly power and clarified its role in the economy. Firms with monopoly power distinguish themselves in a number of different ways. They tend to have higher markups and profit rates, they are more likely to collude, export, and make foreign investments, and they are less likely to practice prolonged price competition. This book draws heavily on actual corporate behavior to illustrate each of these topics.

One of the strengths of monopoly theory is that it continues to be relevant for understanding current issues. Several of these are described in the book, including the 1980s merger boom, government regulation, executive salaries, trade barriers, corporate PACs, and the issue of competitiveness.

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