Edward Chamberlin

Last updated
Edward H. Chamberlin
Edward Chamberlin.jpg
Born(1899-05-18)May 18, 1899
DiedJuly 16, 1967(1967-07-16) (aged 68)
Nationality American
Institution Harvard University
Field Microeconomics
School or
tradition
Neoclassical economics
Alma mater University of Iowa
University of Michigan
Harvard University
Doctoral
advisor
Allyn Abbott Young
Contributions Monopolistic competition

Edward Hastings Chamberlin (May 18, 1899 – July 16, 1967) was an American economist. He was born in La Conner, Washington, and died in Cambridge, Massachusetts.

Americans Citizens, or natives, of the United States of America

Americans are nationals and citizens of the United States of America. Although nationals and citizens make up the majority of Americans, some dual citizens, expatriates, and permanent residents may also claim American nationality. The United States is home to people of many different ethnic origins. As a result, American culture and law does not equate nationality with race or ethnicity, but with citizenship and permanent allegiance.

Economist professional in the social science discipline of economics

An economist is a practitioner in the social science discipline of economics.

La Conner, Washington Town in Washington, United States

La Conner is a town in Skagit County, Washington, United States with a population of 891 at the 2010 census. it is included in the Mount Vernon–Anacortes, Washington Metropolitan Statistical Area. In the month of April, the town annually hosts the majority of the Skagit Valley Tulip Festival events. The center of town, roughly bounded by Second, Morris and Commercial Streets and the Swinomish Channel, is a historic district and is listed on the National Register of Historic Places.

Contents

Chamberlin studied first at the University of Iowa (where he was influenced by Frank H. Knight), then pursued graduate-level studies at the University of Michigan, eventually receiving his Ph.D. from Harvard University in 1927.

University of Iowa Public research university in Iowa City, Iowa, United States

The University of Iowa is a public research university in Iowa City, Iowa. Founded in 1847, it is the oldest and the second largest university in the state. The University of Iowa is organized into 11 colleges offering more than 200 areas of study and seven professional degrees.

University of Michigan Public research university in Ann Arbor, Michigan, United States

The University of Michigan, often simply referred to as Michigan, is a public research university in Ann Arbor, Michigan. The university is Michigan's oldest; it was founded in 1817 in Detroit, as the Catholepistemiad, or University of Michigania, 20 years before the territory became a state. The school was moved to Ann Arbor in 1837 onto 40 acres (16 ha) of what is now known as Central Campus. Since its establishment in Ann Arbor, the university campus has expanded to include more than 584 major buildings with a combined area of more than 34 million gross square feet spread out over a Central Campus and North Campus, two regional campuses in Flint and Dearborn, and a Center in Detroit. The university is a founding member of the Association of American Universities.

Harvard University Private research university in Cambridge, Massachusetts, United States

Harvard University is a private Ivy League research university in Cambridge, Massachusetts, with about 6,700 undergraduate students and about 13,100 postgraduate students. Established in 1636 and named for its first benefactor, clergyman John Harvard, Harvard is the United States' oldest institution of higher learning. Its history, influence, wealth, and academic reputation have made it one of the most prestigious universities in the world. It is cited as the world's top university by many publishers.

Economics

For most of his career Edward Chamberlin taught economics at Harvard (1937–1967). He made significant contributions to microeconomics, particularly on competition theory and consumer choice, and their connection to prices. Edward Chamberlin coined the term "product differentiation" to describe how a supplier may be able to charge a greater amount for a product than perfect competition would allow. In 1962 was admitted as corresponding academician to the RACEF. [1]

In economics and marketing, product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own products. The concept was proposed by Edward Chamberlin in his 1933 The Theory of Monopolistic Competition.

In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition. In theoretical models where conditions of perfect competition hold, it has been theoretically demonstrated that a market will reach an equilibrium in which the quantity supplied for every product or service, including labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum.

His most significant contribution was the Chamberlinian monopolistic competition theory. Chamberlin published his book The Theory of Monopolistic Competition in 1933, the same year that Joan Robinson published her book on the same topic: The Economics of Imperfect Competition, so these two economists can be regarded as the parents of the modern study of imperfect competition. Chamberlain's book is often compared to Robinson's book The Economics of Imperfect Competition, in which Robinson coined the term "monopsony," which is used to describe the buyer converse of a seller monopoly. Monopsony is commonly applied to buyers of labour, where the employer has wage setting power that allows it to exercise Pigouvian exploitation [2] and pay workers less than their marginal productivity. Robinson used monopsony to describe the wage gap between women and men workers of equal productivity. [3]

In Chamberlinian monopolistic competition every one of the firms have some monopoly power, but entry drives monopoly profits to zero. The concept gets its name from Edward Chamberlin.

Joan Robinson English economist

Joan Violet Robinson was a British economist well known for her wide-ranging contributions to economic theory. She was a central figure in what became known as post-Keynesian economics.

In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. In the microeconomic theory of monopsony, a single entity is assumed to have market power over sellers as the only purchaser of a good or service, much in the same manner that a monopolist can influence the price for its buyers in a monopoly, in which only one seller faces many buyers.

Chamberlin is also considered one of the first theorists who applied the marginal revenue idea, which is implicit on Cournot's monopoly theory in the late 1920s and early 1930s. [4] Chamberlin is thought to have conducted "not only the first market experiment, but also the first economic experiment of any kind," with experiments he used in the classroom to illustrate how prices don't necessarily reach equilibrium. [5] Chamberlin concludes that most market prices are determined by monopolistic and competitive aspects. [4]

Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law.

Chamberlin's theory of monopolistic competition is used by sociologist Harrison White in his "markets from networks" model of market structure and competition.

Harrison White American sociologist

Harrison Colyar White is the emeritus Giddings Professor of Sociology at Columbia University. White played an influential role in the “Harvard Revolution” in social networks and the New York School of relational sociology. He is credited with the development of a number of mathematical models of social structure including vacancy chains and blockmodels. He has been a leader of a revolution in sociology that is still in process, using models of social structure that are based on patterns of relations instead of the attributes and attitudes of individuals.

The works of Chamberlin, Robinson, and other contributors to the Structure-Conduct-Performance Paradigm were heavily discounted by game theorists in the 1960s, but Nobel-Prize winner Paul Krugman and others built the foundations of the New Theory of International Trade by combining such theories of industrial structure with production functions that assumed significant economies of scale and scope.

Major works

Related Research Articles

Microeconomics branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources

Microeconomics is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

Monopoly Market structure with a single firm dominating the market

A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity. This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few sellers dominating a market. Monopolies are thus characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices. Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry.

Monopolistic competition Imperfect competition of differentiated products that are not perfect substitutes

Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another and hence are not perfect substitutes. In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms. In the presence of coercive government, monopolistic competition will fall into government-granted monopoly. Unlike perfect competition, the firm maintains spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities. The "founding father" of the theory of monopolistic competition is Edward Hastings Chamberlin, who wrote a pioneering book on the subject, Theory of Monopolistic Competition (1933). Joan Robinson published a book The Economics of Imperfect Competition with a comparable theme of distinguishing perfect from imperfect competition.

In economic theory, imperfect competition is a type of market structure showing some but not all features of competitive markets.

In economics, industrial organization or industrial economy is a field that builds on the theory of the firm by examining the structure of firms and markets. Industrial organization adds real-world complications to the perfectly competitive model, complications such as transaction costs, limited information, and barriers to entry of new firms that may be associated with imperfect competition. It analyzes determinants of firm and market organization and behavior as between competition and monopoly, including from government actions.

This aims to be a complete article list of economics topics:

The following outline is provided as an overview of and topical guide to industrial organization:

In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power. A firm with total market power can raise prices without losing any customers to competitors. Market participants that have market power are therefore sometimes referred to as "price makers" or "price setters", while those without are sometimes called "price takers". Significant market power occurs when prices exceed marginal cost and long run average cost, so the firm makes economic profit.

Fritz Machlup austrian economist

Fritz Machlup was an Austrian-American economist who was president of the International Economic Association from 1971–1974. He was one of the first economists to examine knowledge as an economic resource, and is credited with popularizing the concept of the information society.

Market (economics) Mechanisms whereby supply and demand confront each other and deals are made, involving places, processes and institutions in which exchanges occur.

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale.

Competition (economics) concept in economics

In economics, competition is a condition where different economic firms seek to obtain a share of a limited good by varying the elements of the marketing mix: price, product, promotion and place. In classical economic thought, competition causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater selection typically causes lower prices for the products, compared to what the price would be if there was no competition (monopoly) or little competition (oligopoly).

A bilateral monopoly is a market structure consisting of both a monopoly and a monopsony.

In neoclassical economics, a market distortion is any event in which a market reaches a market clearing price for an item that is substantially different from the price that a market would achieve while operating under conditions of perfect competition and state enforcement of legal contracts and the ownership of private property. A distortion is "any departure from the ideal of perfect competition that therefore interferes with economic agents maximizing social welfare when they maximize their own". A proportional wage-income tax, for instance, is distortionary, whereas a lump-sum tax is not. In a competitive equilibrium, a proportional wage income tax discourages work.

Outline of economics Overview of and topical guide to economics

The following outline is provided as an overview of and topical guide to economics:

Joe Staten Bain was an American economist associated with the University of California, Berkeley. Bain was designated a Distinguished Fellow by the American Economic Association in 1982. An accompanying statement referred to him as "the undisputed father of modern Industrial Organization Economics."

References

  1. His profile as researcher at the Real Academia de Ciencias Económicas y Financieras of Spain. <https://racef.es/es/academicos/correspondiente-extranjero/ilmo-sr-prof-edward-h-chamberlin>
  2. "Pigouvian Exploitation of Labor". JSTOR   1927526.Cite journal requires |journal= (help)
  3. http://www.u.arizona.edu/~rlo/696i/Monopsony_Model_Latex.pdf
  4. 1 2 Brue, Stanley L.; Randy R. Grant (2008). The evolution of economic thought. Thomson. p. 543.
  5. Ross Miller (2002). Paving Wall Street: Experimental Economics and the Quest for the Perfect Market . New York: John Wiley & Sons. pp. 73–74. ISBN   0-471-12198-3.