The influence of Thorstein Veblen's Theory of Business Enterprise on the economic theories of Edward Chamberlin.
Journal of Economic Issues › Vol. 38 Nbr. 2, June 2004
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The influence of Thorstein Veblen's Theory of Business Enterprise on the economic theories of Edward Chamberlin.
Edward Chamberlin's Theory of Monopolistic Competition is one of the twin pillars (along with Joan Robinson's contribution) of what is today called "Industrial Organization." In addition to its impact on microeconomics, macroeconomics has over the last twenty years incorporated "monopoly power" into its "microfoundations," particularly as developed by the "new Keynesian approach" (Blanchard et al. 1989, 373-374). The purpose of this paper is to evaluate the apparent influence of Thorstein Veblen, particularly his Theory of Business Enterprise ([1904] 1975) on Edward Chamberlin's Theory of Monopolistic Competition (1933) and then to evaluate whether or not Chamberlin advanced Veblen's theory, as Chamberlin claimed. (1) Early in his book, Chamberlin quoted Veblen's Theory of Business Enterprise with reference to the pervasiveness of what Veblen referred to as the "monopoly element" (Chamberlin 1933, 5). Chamberlin's quoting of Veblen indicates a familiarity with Veblen's contribution to the analysis of "selling costs," as found in The Theory of Business Enterprise. In fact, the pages Chamberlin ...
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