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A provocative defense of market dominance
In Defense of Monopoly offers an unconventional but empirically grounded argument in favor of market monopolies. Authors McKenzie and Lee claim that conventional, static models exaggerate the harm done by real-world monopolies, and they show why some degree of monopoly presence is necessary to maximize the improvement of human welfare over time.
Inspired by Joseph Schumpeter's suggestion that market imperfections can drive an economy's long-term progress, In Defense of Monopoly defies conventional assumptions to show readers why an economic system's failure to efficiently allocate its resources is actually a necessary precondition for maximizing the system's long-term performance: the perfectly fluid, competitive economy idealized by most economists is decidedly inferior to one characterized by market entry and exit restrictions or costs.
An economy is not a board game in which players compete for a limited number of properties, nor is it much like the kind of blackboard games that economists use to develop their monopoly models. As McKenzie and Lee demonstrate, the creation of goods and services in the real world requires not only competition but the prospect of gains beyond a normal competitive rate of return.
"In their new book In Defense of Monopoly, Richard McKenzie and Dwight Lee are attempting to start an intellectual revolution in economics by daring to argue that people should be permitted to maintain monopolies on the new products they create—even if the products created cannot be patented or copyrighted. Because they admirably challenge entrenched conventional economic wisdom, their arguments must be taken seriously by antitrust scholars and practitioners."
—Gordon Tullock, University Professor of Law and Economics, George Mason University
"Antitrust law historically has been wedded to the view that monopoly is a scourge on markets. With In Defense of Monopoly, Richard McKenzie and Dwight Lee make a broad, frontal assault on conventional monopoly wisdom, arguing with force that some market pricing power is essential for the full advancement of human welfare through markets. This book is a scholarly triumph for McKenzie and Lee, and a must-read for antitrust scholars, judges, prosecutors and defense attorneys. The late economist Joseph Schumpeter would be pleased with how McKenzie and Lee extend his insights that have been largely ignored by a generation or more of economic and law scholars. While controversial, this book may transform antitrust thinking for decades."
—E. Thomas Sullivan, Provost and Senior Vice President, and Julius E. Davis, Chair in Law, University of Minnesota
"In Defense of Monopoly is a skillful, scholarly (and Schumpeterian) blend of history, theory, and public policy concerning the 'monopoly problem.'"
—Kenneth G. Elzinga, Robert C. Taylor Professor of Economics, University of Virginia
"Provocative title aside, focused emphasis on the creative potential of free markets, neglected both by economists and in public understanding."
—James M. Buchanan, Nobel Laureate in Economics, 1986
"Dwight Lee and Richard McKenzie are two of America's best microeconomic theorists. This book will teach you everything they know about monopoly and competition."
—Tyler Cowen, University Professor of Economics, George Mason University, and creator of "The Marginal Revolution" blog
"Conventional economic theory starts with a strong presumption that favors competitive markets over monopoly. In Defense of Monopoly is a new work in which Richard McKenzie and Dwight Lee challenge the conventional wisdom by pointing to the myriad ways in which monopoly power helps advance consumer welfare by spurring innovation. Ranging widely over economic history from Smith to Schumpter, our authors move nimbly across antitrust patents and copyrights, forcing inquisitive readers to reexamine a bedrock assumption of modern economic theory."
—Richard Epstein, Director, Law and Economics Program, University of Chicago