ABSTRACT
This chapter is concerned with the market power that arises naturally from active competition among a few large independent corporations and is reflected in the pricing discretion in the hands of individual competing enterprises. The difference between classical and administrative competition can easily be seen in the difference between the markets for farm products and for farm implements. When the Great Depression forced economists to rethink macroeconomic theory beyond the range of the business cycle, it is not surprising that the principles of classical monopoly theory were applied to competition among the few. In the case of classical markets, an individual firm that expects inflation in the near future can speculate, first adding to demand in the market and then adding to supply in the market by the same quantity when it cashes in, thus canceling out its net effect for a period as a whole.
