A third of a century ago, in my VJelfare and Connetition, I introduced 
the concepts of price maker and price taker and analyzed the asymmetrical^ 
exploit at 1 -' °t- 
/market relations between price maker and price taker. That proved useful 
K y also 
as a pedagogical device and A rendered the description of our economy much 
more realistic by integrating advertising, quality changes and other forms 
of nonprice competition into economic theory. At the time, however, I failed 
to realize the even greater usefulness of those concepts for building a model 
of the economy that can bring out the v;elfare economic implications of 
turn-of-the-century capitalism and show up some of its characteristic 
features, which now that we miss them seem very valuable, and which, in our 
preoccupation with the perfectly competitive model, we have overlooked or at 
least neglected. Professor Sir John Kicks, who reviewed the book, rightly 
criticized it on the ground that it did not fulfil the promise of its title: 
it dealt with competition but not with welfare. Ky belated realization of 
what he meant and what the welfare implications of my approach were, I owe, 
together with many of the points made in this paper, to a forthcoming book 
of Professor Martin Ueitzman on The Share Economy. 
Let me start by pointing to some shortcomings of the model of 
perfect competition. That model has been rised both as a description of how 
the market economy functions and as an ideal of perfection to hanker after 
and strive for. Despite its great value, the model has shortcomings in 
both roles. Its shortcomings as a description of reality are well known*