Edward Chamberlin

Edward Hastings Chamberlin (May 18, 1899 – July 16, 1967) was an American economist, known for his theories on industrial monopolies and imperfect competition. He is regarded as one of the most influential American economists of the mid-twentieth century. His book Theory of Monopolistic Competition (1933), along with Joan Robinson’s The Economics of Imperfect Competition (1933), started what is known as the monopolistic competition revolution. Chamberlin's book provided insights into competitive markets noting the importance of factors as product differentiation, the advantages of location, advertising, and brand preference.

Contents

With his work Chamberlin indebted us with important knowledge of economic science, understandings that in their application have served many businesses well as they seek to gain and satisfy customers. Such applications of Chamberlin's ideas help suppliers and consumers interact to the satisfaction of both, an important step in the establishment of a society of harmony and prosperity.

Life

Edward Chamberlin was born in on May 18, 1899, La Conner, Washington. He studied first at the University of Iowa (where he was influenced by Frank H. Knight), then pursued graduate-level studies at the University of Michigan, eventually receiving his Ph.D. from Harvard University in 1927. His dissertation dealt with imperfect competition and was supervised by Allyn Young.

For most of his career Edward Chamberlin taught economics at Harvard (1937-1967). He served as chair of the economic department during its ‘golden age’ (1939–1943) when it included several renowned economists, including Joseph Schumpeter, Alvin Hansen, Seymour Harris, Sumner Slichter, and Wassily Leontief.

Chamberlin published his book The Theory of Monopolistic Competition in 1933, the same year that Joan Robinson published her book on the same topic: The Economics of Imperfect Competition. Chamberlin however saw his idea unique and has spent the most of his career defending it and trying to differentiate it from Robinson’s.

Chamberlin died on July 16, 1967, in Cambridge, Massachusetts.

Work

Chamberlin’s most significant contribution was the theory of monopolistic competition. In 1933, Chamberlin published his book The Theory of Monopolistic Competition, an outgrowth of his PhD dissertation at Harvard in 1927. In the same year Joan Robinson published her book on the same topic: The Economics of Imperfect Competition, so these two economists can be regarded as the parents of the modern study of imperfect competition.

Chamberlin conducted numerous experiments on imperfect markets at Harvard University, in which he used his students as subjects. He found out that the number of items sold was consistently higher in the situation of "imperfect" markets than would have been in the case if the markets were "perfect." He also noticed that the average price was consistently lower than their equivalents in perfect markets. He found it puzzling, and concluded that the biased behavior of his students caused that to happen.

Based on his experiments, Chamberlin concluded that even though the situation on the market may look like that of pure competition, where a large number of buyers and sellers participate in economic games, in reality it is far from that. He wrote: "[a]ny thing which makes buyers prefer one seller to another, be it personality, reputation, convenient location, or the tone of his shop," will skew the situation of pure competition (p.8). In addition:

"where there is any degree of differentiation whatever, each seller has an absolute monopoly of his own product, but is subject to the competition of more or less imperfect substitutes. Since each is a monopolist and yet has competitors, we may speak of them as ‘competing monopolists,’ and, with particular appropriateness, of the forces at work as those of ‘monopolistic competition." (p. 9)

Chamberlin coined the term "product differentiation" to describe how a supplier may be able to charge a greater amount for a product than perfect competition would allow. Product differentiation simply means the process by which sellers try to distinguish their products from others by making them more attractive to particular buyers. Brand names are a typical example of product differentiation, where physical products are often very similar, while the brand name is what makes the products distinct.

Chamberlin spent the rest of his career trying to differentiate his theory of monopolistic competition from Joan Robinson’s theory of imperfect competition, and in defending it against the Chicago School and other critics. He published his Towards a More General Theory of Value in 1957, a collection of essays on monopolistic competition.

Legacy

Edward Chamberlin is regarded as one of the most influential American economists of the mid-twentieth century. His book Theory of Monopolistic Competition (1933), along with Robinson’s The Economics of Imperfect Competition (1933), started what is known as the monopolistic competition revolution. The book discussed such factors as product differentiation, the advantages of location, advertising, and brand preference, which still occupy a central point in modern economic theory.

Publications

  • Chamberlin, Edward H. 1929. Duopoly: Values where sellers are few. Quarterly Journal of Economics, 43, 63-100.
  • Chamberlin, Edward H. 1933. Theory of Monopolistic Competition. Cambridge, MA: Harvard University Press.
  • Chamberlin, Edward H. 1948. Proportionality, Divisibility and Economics of Scale. Quarterly Journal of Economics, 1-2, 229-262
  • Chamberlin, Edward H. 1948. An Experimental Imperfect Market. The Journal of Political Economy, 56 (2), 95-108
  • Chamberlin, Edward H. 1950. Product Heterogeneity and Public Policy. American Economic Review, 40 (2), 85-92.
  • Chamberlin, Edward H. 1951. Monopolistic Competition Revisited, Economica, 18 (72), 343-362
  • Chamberlin, Edward H. 1951. Impact of Recent Monopoly Theory on the Schumpeterian System. Review of Economics and Statistics, 33, 133-138.
  • Chamberlin, Edward H. 1952. Full Cost and Monopolistic Competition. The Economic Journal, 62 (246), 318-325
  • Chamberlin, Edward H. 1953. The Product as an Economic Variable. The Quarterly Journal of Economics, 67 (1), 1-29
  • Chamberlin, Edward H. 1954. Measuring the Degree of Monopoly and Competition. In E. H. Chamberlin (ed.), Monopoly and Competition and their Regulation. London: Macmillan. ISBN 0333406281
  • Chamberlin, Edward H. 1957. On the Origin of Oligopoly. The Economic Journal, 67 (266), 211-218
  • Chamberlin, Edward H. 1982 (original published in 1957). Towards a More General Theory of Value. Westport, CT: Greenwood Press. ISBN 0313235902

References

  • Brakman, Steven and Heijdra, Ben J. 2001. The Monopolistic Competition Revolution in Retrospect. Cambridge University Press. ISBN 0521819911
  • Cummings, Jeffrey L. 1996. How Can Firms Earn Above-Competitive Profits? Retrieved January 15, 2008.
  • Robinson, Romney. 1971. Edward H. Chamberlin. New York, NY: Columbia University Press. ISBN 0231030053
  • Roth, A.E. 1993. On the Early History of Experimental Economics. Journal of the History of Economic Thought, 15, 184-209.
  • Spiegel, Henry W. and Ann Hubbard. 1991. The Growth of Economic Thought, 3rd ed. Duke University Press. ISBN 0822309734

External links

All links retrieved September 23, 2017.

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