Toward a Concept of Workable Competition

The paper of which this is an enlarged and revised version was read at a joint Round Table of the American Economic Association and the Econometric Society, during the meetings at Philadelphia, December, 1939. Where one of the conditions of perfect competition is absent, the presence of others may lead to greater rather than less imperfection. Long-run curves of individual demand and cost are flatter than commonly represented, and the imperfections of competition correspondingly less. Industry subject to fluctuating demand requires prices in excess of short-run marginal cost. Favorable conditions appear to include a sloping individual demand curve, and some uncertainty whether a reduction of price will be…