Dear unknown reader, I thank you for beginning to read this article. Nevertheless, I suppose your time is scarce. So, if you’re interested by the words « monopoly price » or « Rothbard », I recommend to you to begin with my previous article, which deals with the same topic, but is more interesting, imho.
In Man, Economy, and State, as from the first lines of the third section of the chapter 10 (section entitled “The Illusion of Monopoly Price”), and even more in the part D of this section, Rothbard clearly announces his goal: to attack the very concept of “monopoly price”.
Thus, he writes
“In the market, there is no discernible, identifiable competitive price, and therefore there is no way of distinguishing, even conceptually, any given price as a “monopoly price”
“To define a monopoly price as a price attained by selling a smaller quantity of a product at a higher price is therefore meaningless”.
Further, he expressly explains that his objective is not (only) to show that a « monopoly price » is hard to identify in practice. Indeed, this difficulty had already amply been emphasized by Mises. It’s why Rothbard takes care to note that
“It might be objected at this point that there are many useful, indeed indispensable, theoretical concepts which cannot be practically isolated in their pure form in the real world. Thus, the interest rate, in practice, is not strictly separable from profits, and the various components of the interest rate are not separable in practice, but they can be separated in analysis.”
So, Rothbard’s intention was to demonstrate that it is impossible, even in theory, to separate a “competition price” from a “monopoly price”.
However, in the course of his demonstration, Rothbard seems to hesitate and alternate between a conceptual and a practical approach.
Thus, to the question “Is the market price, 0P, a “competitive price” or a “monopoly price”?”, instead of answering “this question is meaningless”, he writes ““The answer is that there is no way of knowing.»
More notably, he assert that “Contrary to the assumptions of the theory, there is no “competitive price” which is clearly established somewhere, and which we may compare 0P with”, as if he adopted the point of view of a bureaucrat of magistrate in charge of enforcing antitrust policies.
In the same spirit, Rothbard writes,
“The alleged “competitive price” can be identified neither by the producer himself nor by the disinterested observer”
“The basic assumption, usually only implicit, is that there is some identifiable stock, say 0A, and some identifiable market price, say, AC, which will result from competitive conditions.”
Yet, with only a small reserve (about the elimination of a present stock of products), I think the Rothbard’ conceptual refutation is correct. Nevertheless, I’m obliged to note that, at least at the time when Rothbard wrote MES, not everything was clear in his mind – I don’t know whether he wrote back about the issue afterwards.