by Fabrizio Ferrari
Mises.org
Chapter 10 of Rothbard’s Man, Economy, and State with Power and Market ([1962, 1970] 2009), “Monopoly and Competition,” proffers a compelling reelaboration of monopoly theory: it highlights, indeed, some inconsistencies within the neoclassical analysis conventionally held as true and taught in undergraduate and graduate microeconomics classes.
Rothbard’s monopoly analysis differs from the neoclassical one in (at least) three main elements. First, it adopts a different definition of monopoly. Second, it lays out the pointlessness of contrasting monopoly with “pure” (or perfect) competition—whose theoretical framework rests upon fallacious premises. Third, it dismantles the “monopoly’s loss of efficiency” argument—consumers retain their sovereignty over production.