Marshall
In 1890 Alfred Marshall, like the classical economists, was still confident that the race of competition could take place, on condition there was a sufficient degree of knowledge and no agreements among firms.
However, his biological analogy of the firm, that is, the metaphor of the young trees of the forest struggling with their older rivals, was unsuitable for dealing with the phenomenon of the big industrial concentrations. In fact, in later editions of his Principles he was less optimistic about competition: for instance, he recognized the effect of economies of scale on the size of big business units, and described some firms’ strategies to drive competitors out of the market. Most of the topics that belong to today’s IO, such as vertical and horizontal integration, innovation, the behaviour of oligopolistic firms and regulation, can be found in his 1919 Industry and Trade (Phillips and Stevenson 1974). It should also be remembered that it was from Marshall that we got the concept itself of industry, which is the basis of the discipline; as a matter of fact, without the Marshallian conception of industry “the field of Industrial Organization is a wilderness” (Mason 1957, 5). Marshall is important in this context not only directly, but also indirectly because he inspired some criticisms from Piero Sraffa, which opened the way to the theory of imperfect competition. Marshall’s importance can also be seen from the fact that we talk about a Marshallian approach to IO, as juxtaposed to the American line. It includes the concept of industrial districts, which brings sociological and cultural aspects to bear on economic theory (Becattini 1990), while a different approach to clusters is today part of economic geography. In Europe the field of IO even had a different name, which was inspired by Marshall, namely, industrial economics.
More on the topic Marshall:
- MARSHALL AND ECONOMIC POLICY
- ALFRED MARSHALL (1842-1924)
- In and Out of Marshall's Shadow
- Marshall
- The Marshall Era
- The Abandonment of Marshall’s Programme and its Resurrection
- THE AGGREGATIVE STRAND OF MARSHALL'S THOUGHT
- MARSHALL ON LONG-PERIOD ECONOMIC CHANGE
- Alfred Marshall was born on 26 July 1842 in the London suburb of Bermondsey into a lower middle-class family, which subsequently moved to the suburb of Clapham.
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