The Economics of Imperfect Competition

Abstract

“AMONG persons interested in economic analysis, there are tool-makers and tool-users.”1 This book is presented to the analytical economist as a box of tools. It is an essay in the technique of economic analysis, and can make only an indirect contribution to our knowledge of the actual world. It is only by using their tools upon observed facts that economists can build up that working model of the actual world which it is their aim to construct. To tinker with the tool-box is merely a preliminary to the main attack, and, to those who are in haste for results, it may appear an idle occupation far inferior to the fruitful work of the tool-users. The gap between the tool-makers and the tool-users is a distressingly wide one, and no economist can fail to have sympathy with the impatience of the politician, the business man, and the statistical investigator, who complain of the extremely poor, arid, or even misleading information with which the analytical economists provide him. If a government is anxious to know whether in an actual case it should allow a railway the right to charge discriminating prices, it is poor comfort to be told that it will depend upon the relative concavities of the demand curves for transport of various types of goods whether the railway will carry a greater number of tons if it is allowed to discriminate than if it is not.