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8/2010

 

DEPFID Working Papers - 8 / 2010 - Abstract

 

Competition and equilibrium: Attilio da Empoli’s innovative approach

 

Massimo Di Matteo

 

 

Attilio da Empoli (1904-48) is a relatively unknown Italian economist who for various reasons, included a premature death, is not recognized as an innovative scholar. One of the main preoccupation of da Empoli’s scientific research was to analize and refine the concept of equilibrium. In the paper I review two main attempts in this direction elaborated in books and papers mostly in Italian (or in a not easily accessible book). The first concerns the introduction of the concept of ultramarginal cost to complement Marshall’s analysis. I show that da Empoli is a forerunner of several concepts to be introduced later, such as kinked demand curve, entry preventing price, limit price, etc. In particular I compare da Empoli’s analysis with Sylos Labini-Modigliani’s theory. After this work da Empoli continued his research and, in the context of a discussion about the theory of international trade, came across a difficulty with the Marshallian analysis of short and long periods. In the second part of the paper I review the discussion that took place in the Rivista Italiana di Scienze Economiche stressing three aspects. First, the analysis was not confined to the comparison of two equilibrium positions (as traditionally made in the pure theory of trade) but it was investigated how the costs that the economy incurs in moving from free trade to autarky may modify some traditional results. Secondly, a link can be established between the concept of ultramarginal cost and the analysis of “costi intermedi” put forward by Borgatta and Mazzei. Thirdly, the analysis of those costs calls into question the problem of time and the different definitions of equilibrium according to the temporal dimension involved. Da Empoli spotted a contradiction in the definitions of short run equilibrium that Marshall gave in his Principles and, on the basis also of the most recent literature on the subject, an interpretation of his position that leads to a rejection of the concept of long run stationary equilibrium will be proposed.

 

 

 

Keywords: competition, equilibrium, ultramarginal cost, limit price

 

JEL Classification: B3, B2, B4

 

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Acknowledgements: I would like to thank for helpful suggestions on a previous version the participants at the HES conference in Syracuse (June 2010)

 

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Dipartimento di Politica Economica, Finanza e Sviluppo – Università di Siena