Oligopoly, Theory of

a bourgeois economic theory that analyzes new forms of domination of the market by group monopolies. The theory of oligopoly is apologetic. Its purpose is to elaborate practical recommendations for corporations and the bourgeois state.

In the late 19th century and the early 20th the mathematical school of bourgeois political economy studied the duopoly, a type of oligopoly. In the late 1920’s, E. H. Chamberlin (USA) proposed a theory of monopolistic competition, which viewed oligopoly chiefly as a group monopoly of competitors in markets for differentiated goods of the same type (for example, different classes of motor vehicles). Chamberlin’s theory also analyzed oligopoly in terms of markets for standardized output. H. von Stackelberg (Germany) classified various types of oligopoly. With the publication of works by J. M. Clark, R. Triffin, and W. Fellner (USA), the theory of oligopoly began to take account of the more complex character of market conditions (for example, the interconnection of industries, shifts in supply and demand and in company assets, and the level of information about the market). However, research by bourgeois economists on the market manifestations of group monopoly is divorced from analysis of the most important nonmarket factors (production, financial, social, and political factors). This disguises the monopolistic character of oligopoly and its multifaceted influence on the exacerbation of the contradictions of capitalism in the context of the scientific and technological revolution.

A number of bourgeois economists, including P. Samuelson and R. Dorfman (USA), acknowledge that oligopoly pursues the maximization of profits but contend that the functioning of group monopoly is subordinated to the interests of the consumer. Thus, they contradict their admission that the oligopolistic structure of an industry and methods of nonprice competition promote the maintenance and growth of monopolistic prices, which lower the real wages of the working people.

Other bourgeois economists, including J. Galbraith (USA), emphasize the negative effect of oligopoly on the consumer. At the same time, however, they try to demonstrate the “rational” and even planned character of the activities of oligopolies, which are supposedly aimed at sustaining a rapid rate of growth of output. Outright defenders of monopolies use the theory of oligopoly to protect giant corporations from the effects of antitrust legislation.