In Defense of Monopoly
How Market Power Fosters Creative Production
Richard B. McKenzie and Dwight R. Lee
Publisher: University of Michigan Press
Imprint: University of Michigan Press
Subject: Business & Economics - Economics/Theory, Law - Business & Financial
Print ISBN: 9780472116157
eBook ISBN: 9780472901142
In Defense of Monopoly offers an unconventional but empirically
grounded argument in favor of market monopolies. Authors McKenzie
and Lee claim that conventional, static models exaggerate the harm
done by real-world monopolies, and they show why some degree of
monopoly presence is necessary to maximize the improvement of human
welfare over time.
Inspired by Joseph Schumpeter's suggestion that market
imperfections can drive an economy's long-term progress, In Defense
of Monopoly defies conventional assumptions to show readers why an
economic system's failure to efficiently allocate its resources is
actually a necessary precondition for maximizing the system's
long-term performance: the perfectly fluid, competitive economy
idealized by most economists is decidedly inferior to one
characterized by market entry and exit restrictions or costs.
An economy is not a board game in which players compete for a
limited number of properties, nor is it much like the kind of
blackboard games that economists use to develop their monopoly
models. As McKenzie and Lee demonstrate, the creation of goods and
services in the real world requires not only competition but the
prospect of gains beyond a normal competitive rate of return.
"Antitrust law historically has been wedded to the view that monopoly is a scourge on markets. With In Defense of Monopoly, Richard McKenzie and Dwight Lee make a broad, frontal assault on conventional monopoly wisdom, arguing with force that some market pricing power is essential for the full advancement of human welfare through markets. This book is a scholarly triumph for McKenzie and Lee, and a must-read for antitrust scholars, judges, prosecutors and defense attorneys. The late economist Joseph Schumpeter would be pleased with how McKenzie and Lee extend his insights that have been largely ignored by a generation or more of economic and law scholars. While controversial, this book may transform antitrust thinking for decades."
—E. Thomas Sullivan, Provost and Senior Vice President, and Julius E. Davis, Chair in Law, University of Minnesota