chapter  III
29 Pages

Bilateral Monopoly

This chapter discusses there are two absolutely monopolistic enterprises or combinations which deliver different materials or services to be used in a fixed proportion by a number of competing producers; they will both be interested in pursuing an active price policy. It indicates some reasons why the peculiar cases must be supposed to be rather frequent in practice. The chapter considers Augustin Cournot's special solution of the problem of monopolistic competition as an accidental marginal case, since the power of extension of the enterprises towards new customers and towards the old customers, was more complicated than he conceived. The difference between simple and bilateral monopoly, like the difference between monopoly and competition, is greater under decreasing costs, and smaller under increasing costs. The chapter also examines the conditions for the form of monopolistic adjustment may, therefore, easily be substituted by others, such as fighting or amalgamation, in which case the solution differs.