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George J. Stigler, have tried to classify industries as monopolistic, workably competitive, and governmentally operated or supervised, and to trace changes over time in these categories.1 They conclude that, as of 1939, roughly one quarter of the economy could be regarded as governmentally operated or supervised. Of the three-quarters remaining, at most one-quarter and perhaps as little as 15 per cent can be regarded as monopolistic, at least three-quarters and perhaps as much as 85 per cent, as competitive. The governmentally operated or supervised sector has of course grown greatly over the past half-century or so. Within the private sector, on the other hand, there appears not to have been any tendency for the scope of monopoly to have increased and it may well have decreased. |
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There is, I suspect, a widespread impression that monopoly is both far more important than these estimates suggest and has been growing steadily over time. One reason for this mistaken impression is the tendency to confuse absolute and relative size. As the economy has grown, enterprises have become larger in absolute size. This has been taken to mean also that they account for a larger fraction of the market, whereas the market may have grown even faster. A second reason is that monopoly is more newsworthy and leads to more attention than competition. If individuals were asked to list the major industries in the United States, almost all would include automobile production, few would include wholesale trade. Yet wholesale trade is twice as important as automobile production. Wholesale trade is highly competitive, hence draws little attention to itself. Few people could name any leading enterprises in wholesale trade, though there are some that are very large in absolute size. Automobile production, while in certain respects highly competitive, has many fewer firms and is certainly closer to monopoly. Everyone can name the leading firms producing automobiles. To cite one other striking example: domestic service is a vastly more important industry than the telegraph and telephone industry. A third reason is the general bias and tendency to overemphasize |
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1G. Warren Nutter, The Extent of Enterprise Monopoly in the United States, 18991939 (Chicago: University of Chicago Press, 1951) and George J. Stigler, Five Lectures on Economic Problems (London; Longmans, Green and Co., 1949), pp. 4665. |
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