ABSTRACT
Contrary to conventional wisdom, the concept of a field of perfectly competitive firms was not implicitly embedded in the reasoning of the founders of the discipline. The continuity view, which sees the neoclassical definition of competition as a mathematically matured product of classical lineage, was first advanced by Knight, then accepted by Mrs. Robinson, Chamberlin, and others, and was eventually cemented into the profession’s bank of unquestioned knowledge by Stigler. I will summarize Stigler’s position below and describe the dissonant reactions from a small minority of economists. The classical heritage, which is embodied in Marshall’s approach to competition, demonstrates that our predecessors did not classify nor reason about market activity in terms of its position at any single instant. Rather, like today’s businessmen, the classical economists saw a moving picture which, while promoting a convergence of price and cost, was also continually subjected to entrepreneurial initiatives that created new equilibrium values.
