Nathan,
Perhaps my comment has been anticipated by your "Competition is a
social relation between firms in and industry and out of an industry."
I want to stress the cooperation and collusion that takes place among
firms. From ADM to GE officers have gone to prison for a crime on which it is
very hard to convict. Many, many household names have been convicted by a
Justice department that seems to avoid a real try at convicting anybody.
Competition is, as you say, a social relation, and so is collusion and
cooperation. Adam Smith made the same remark. Fritz Machlup's old book, The
Basing Point Pricing System should be required reading in every micro course.
Gene
On Nov 20, 2012, at 10:36 AM, nathan tankus <[email protected]>
wrote:
> I said...: "I don't think the level of competition is determined by
> the amount of firms
> that are in an industry or economy."
>
> Jamil said..."This statement does not even appear to pass the test of
> logic, unless I'm
> missing something."
>
> Frankly, I see this as the negative influence of neoclassical
> economics. competition isn't some quantity that increases as you add
> more "competitors". that is reductionist to the extreme. Competition
> is a social relation between firms in an industry and out of an
> industry. There can be an industry with 100 firms and very little
> competition because the level of demand is high or the technological
> differences between firms is very small or capital flows are
> regulated/blocked by a myriad of factors. On the other hand one could
> have two firms that have pushed out every other firm and are still
> intensely competitive and constantly innovating technologically while
> capital flows are relatively uncontrolled. I just don't think the
> number of firms is all that important. what's important is the
> composition of these firms. If ten firms enter who can produce at
> exactly the average level in the industry, how exactly is their more
> competition? they don't have a cost advantage and can't declare a
> price war.
>
> --
> -Nathan Tankus
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