Growth and Stagnation

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Growth and Stagnation

Author:: Steindl, Josef

Scope:: 2 Notizblätter (A5) und ein Typoskript aus 13 Blättern mit handschriftlichen Anmerkungen.

Year of publication:: ohne Datum

Language:: English

Note:: Seite 1 des Typoskripts ist mit dem handschriftlichen Zusatz "Budapest" versehen. - Entstanden nach 1977.

Topic:: Firm and market structure

JEL Classification:: D43 [Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection] E25 [Aggregate Factor Income Distribution] E23 [Macroeconomics: Production]

Shelfmark:: S/M.62.2

DOI:: https://doi.org/10.48671/nls.js.AC14446139

2 To explain the effects of the tranition from a competitive to an oligopolistic economy we have to start from the idea of competition. Competition for me was not a harmless thing like a horizontal individual demand curve, it was the kind of aggressive competition which aimed at ruining competitors* cut throat competition. I regarded it as the function of competition to eliminate excess capacity. In doing so it would also limit the size of the profit margin at normal utilisation of capacity ( the mark-up ). There is always a tendency for this profit margin to rise on account of innovations and discoveries of raw material * sources which would give at least temporarily edtra profits. kt the same time this implies expansion of capacity,of capital, while simultaneously the increase in the profit margin limits the market. Competition, ideally, acts against both the excess capacity and the increase in profit margin: By eliminating some excess capacity directly, and by loosening the distributive constraint on the market ( thus indirectly reducing excess,4apacityJ < The competition comes mainly from new entrants. In my book I did not sufficiently appreciate this. I overrated the role of the large firms in innovation, their dynamism and the part they played in pushing out competitors. It stands to reason that the function of competition will be greatly impaired once a sizeable part of the economy is transformed by the emergence of large oligopolistic concerns. The transition has been often described for example by A.P.Chandler ( The visible hand. Cambridge Mass 1977 ). The reason is that cut throat

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