International Review of Economics

, Volume 56, Issue 1, pp 29–45 | Cite as

The rise and fall of monopolistic competition revolution

  • Lefteris Tsoulfidis


The widespread idea among economists is that monopolistic or imperfect competition is a set of realistic models that were invented in the 1930s and their purpose was to fill the gap between the polar and, at the same time, hypothetical models of perfect competition and pure monopoly. The main argument of this paper is that the monopolistic competition revolution set in motion a reaction—partly driven by methodological considerations, partly ideological—that ultimately led to the restoration of perfect competition, as the benchmark for evaluating market outcomes. In the end, monopolistic competition eclipsed, and perfect competition from the fridges of economic analysis that was up until the 1920s was placed to the very core of microeconomic model-building.


Sraffa Perfect competition Monopolistic competition 

JEL Classification

B20 B21 B51 



I thank Dimitris Paitaridis and Aris Papageorgiou for their helpful comments.


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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MacedoniaThessalonikiGreece

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