Principles of Political Economy, Vol. 1Roscher, Wilhelm
History
Principles of Political Economy, Vol. 1
Roscher, Wilhelm
Economics
The rule that goods which have the same cost of production have also equal
value in exchange, is applicable only to the extent that it is possible to
transfer the factors of production at will from one branch of production
to another. Where this really free competition does not exist, the price
depends entirely on the quantity of the supply, compared with the
solvability or capacity to pay of the purchaser; and hence, it may
sometimes rise far above the cost of production (monopoly-price), and
sometimes sink far below it (forced price, or under-price).(662) Such
hindrances to competition depend, in part, upon natural causes. Thus, in
the case of the works of art of a deceased artist, which cannot be
increased in number;(663) or in that of living celebrities who cannot
extend their mental activity in the same degree that their reputation has
grown. So, also, in the case of precious stones, which are sometimes found
free, and therefore cost nothing, but which, at the same time, have a high
price.(664) Many valuable agricultural products are, together with their
production, limited to a definite and sometimes very small district.(665)
It is to be regarded as a modification of such natural monopolies when
substitutes for a kind of goods which diminish, at least in part, the
demand for them, are found, at a cheaper price; for instance, ordinary
table-wines in the stead of fine wines. The rule applies much more
strictly to those goods which, on account of their greater quantity, can
replace inferior ones,(666) than it does to those where this is not
possible.
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