Correction of the Comparisons

Abstract

THE foregoing comparisons were made upon the assumption that the factors of production are used in the same proportions under monopoly and under competition.1 As we saw in Chapter 14, the assumption that the proportions of the factors are fixed, that is to say, that there is only one way of producing any given output, is highly unplausible. Even if the proportions of land, labour, and capital can be imagined to be fixed in the long period, it is extremely improbable that the proportion of entrepreneurship to output should be fixed by technical considerations alone. We were able to find cases, however, in which the proportions of factors producing any given output would in fact be the same under monopoly and under competition, even when variation was technically possible. If the supply of all factors is perfectly elastic, or if the elasticities of all are equal, or if the monopolist pays no rent, and there are no economies of large scale, there is nothing to be gained in the production of any given output by altering the competitive proportions.