Essenziale di economia
Stanley L. Brue, Campbell R. McConnell, Sean M. Flynn
Copyright © 2010 – The McGraw-Hill Companies srl
7.4 Minimum Efficient Scale and Natural Monopoly Piero Sraffa (1898‐1983), an Italian‐born economist, developed the idea of natural monopoly. He migrated to
England, where he became a student of Alfred Marshall (1842‐1924), and later a teacher, at Cambridge. In 1940, when Germany began the blitzkrieg into France, Sraffa was interned by the British as an enemy alien.
John Maynard Keynes denounced the ill treatment of distinguished refugee scholars such as Sraffa, writing,
"If there are any Nazi sympathizers still at large in this country, we should look in the War Office and our
Secret Service, not in the internment camps." Sraffa observed that in some production processes, average costs fall as output expands. He wrote: Everyday experience shows that a very large number of undertakings—and the majority of those which
produce manufactured consumers' goods—work under conditions of individual diminishing costs. Almost
any producer of such goods, if he could rely upon the market in which he sells his products being prepared to
take any quantity of them from him at the current price, without any trouble on his part except that of
producing them, would extend his business enormously. It is not easy, in times of normal activity, to find an
undertaking which systematically restricts its own production to an amount less than which it could sell at
the current price, and which is at the same time prevented by competition from exceeding that price.
Business men, who regard themselves as being subject to competitive conditions, would consider absurd the
assertion that the limit to their production is to be found in the internal conditions of production in their firm, which do not permit of the production of a greater quantity without an increase in cost. The chief
obstacle against which they have to contend when they want gradually to increase their production does not
lie in the cost of production—which, indeed generally favours them in that direction—but in the difficulty of selling the larger quantity of goods without reducing the price, or without having to face increased
marketing expenses.(1) Given a limited market demand for output, Sraffa concluded that efficiency concerns would lead to a decreasing number of firms in the industry, with the extreme possibility of a natural monopoly. This idea ran contrary to the popular belief that markets operated more in accord with perfect competition. In perfect competition, rising marginal and average costs limit how much output one firm can profitably sell in the market. With a natural monopoly, the firm is limited only by the size of the market, which is in part a function of the prices set by the monopoly. Sraffa's work on natural monopolies was consistent with neoclassical economics, the conservative mainstream in economics. Later years would see a dramatic shift in Sraffa's thinking, as he became a leading figure of the more radical post‐Keynesian school of economic thought. Essenziale di economia
Stanley L. Brue, Campbell R. McConnell, Sean M. Flynn
Copyright © 2010 – The McGraw-Hill Companies srl
1.
Piero Sraffa, "The Laws of Returns under Competitive Conditions," Economic Journal 36 (December 1926) p. 543. Photograph courtesy of: (c)Corbis # MAN0026;