I have checked Piero Sraffa (1926) The Laws of Returns under Competitive Conditions, The Economic Journal, Vol. 36, No. 144 (Dec., 1926), pp. 535-550, but could not find a similar expressions or phrase like "sellers (producers) are price-makers and quantity-takers", although Sraffa talks about the asymmetric nature of demand and supply.

Hi Yoshinori, your topic reminds me of the interwar period. At that time, people criticized monopoly capitalism. The big companies or cartels set the prices and quantities. The buyers were powerless. For you, today's literature on ordoliberalism would be relevant. They wanted to “disempower” the markets. Only have pricing among powerless small players.

Kaldor comes from that time, was 32 years old in 1940. In 1934 he published his first essay in London. His topic is false equilibrium economics, criticized at the time as “liberal harmony doctrine”.

​I also believe that it cannot be called "post-Keynesianism", but rather "pre-Keynesianism", because the antitrust and trust theory with its powerless buyers emerged at the end of the 19th century.

The Sraffi citation by Hotelling is interesting, but not unique at all. Sraffi was a liberal, normally the faction uncritically adhering the harmony doctrine.

Holm Arno Leonhardt

thank you for your information as well as interest to this question.

> it cannot be called "post-Keynesianism", but rather "pre-Keynesianism"

I agree with you. Post-Keynesianism (Post Keynesianism) took form around 1970's. There were a power struggle within economics (say mainstream economics except for Marxian economics) and post-Keynesianism emerged when they started to lose their hegemony in the economic theory. I referred to Post Keynesian economics, because it is practically the unique strand of economics that pay its due importance to the fact that "the sellers are price-makers and quantity-takers."

The rise of monopoly capitalism must have given a great impact for forming the idea that "sellers are price-makers". But, I am more interested to this phenomena, because it has a much wider relevance than monopolies. For example, sellers set prices far before the arrival of modern industrial economy (the First Industrial Revolution).

Please see my question on this point.

https://www.researchgate.net/post/Who_and_when_first_announced_fixed_one-price_system

See also Chapter 2 A large economic system with minimally rational agents (§§2.2, p.56) in Shiozawa, Morioka, and Taniguchi (2019)

Book Microfoundations of Evolutionary Economics

Mitsui Takatoshi started his one-price policy in 1683, not because he was a monopolist but soon became one of biggest monopolists in Edo period. His business model was applauded by a mass of people. Even today, small cafés and shops set the selling price on the item they sell.

By the way, do you know any text (even in German) that includes expression "sellers are price-makers and quantity-takers" or similar expressions?

Yoshinori Shiozawa: Piero Sraffa mentions (The Economic Journal, Vol. 36, No. 144, 1926, p. 544) that the equilibrium is possible "even when the supply curve for the products of each individual firm is descending". Later he continues (on p. 545) that there is "a group of buyers who constitute a firm's clientele to pay, if necessary, something extra in order to obtain the goods from a particular firm rather than from any other." At this point Sraffa does not yet state clearly how this loyalty is used by the firms.

However, he continues (on p. 545) by comparing this situation (of having loyal customers) to monopolists and price fixing. Sraffa writes about how the price increases of monopolists lead to customers using their money to something else. At this point (as per Sraffa), the monopolists start to have competition, because: "it is precisely the possibility of buying them [the other products] that leads the purchasers gradually to give up using his product as he increases the price" (p. 546).

And even more on p. 546: "If we extend this method to those industries in which each firm has more or less a particular market"..."individual producer determines his selling price by the well-known method which makes his monopoly revenue or his profits the maximum obtainable."

So Sraffa kind of writes that there are reasons why customers prefer one firm over others, which gives the firm a monopoly-like status. Such a firm may then set the prices higher than its competitors. Howeverm if the prices are increased too much, the customers will start buying less (or something else). And then that something else becomes the competition.

Isn't this pretty much the same as "sellers are price-makers and quantity-takers"?

(It is very likely that I misunderstood something, as I am not an expert on economics. I may also misinterpret old writings in English.)

Lauri Jokinen

thank you for this detailed check. This kind of negative check is also important.

As I am a Sraffian, I started to consider economics by reading Sraffa (1926) and Sraffa (1960). However, it is not easy to know the true intention that Sraffa wanted to point out. For example, it is famous that Sraffa (1926) stimulated the later research that is usually named theory of imperfect competition (Kahn and Robinson). Chamberlain claimed his theory should be named monopolistic competition. I am doubtful of all these interpretation. At least, Sraffa was not satisfied by works like Joan Robinson. I have taken up this point (as one third) of my recent speech "Ricardo, Sraffa, Pasinetti, and beyond" in an International Conference on Economic Theory and Policy on 2023.9.15 at Meiji University, Tokyo.

I proposed to interpret Sraffa (1926) that he just presented a theory of free market and he was not happy to classify competition perfect, imperfect, or monopolistic. Although he did not find the phrase such as "sellers are price-makers and quantity-takers," he must have been thinking that firms (or producers) set price for their products and produce them as much as they are sold at the price they set. This is the most often observed facts in free market economy. Why should we characterize them as imperfect or monopolistic competition?

N.B If some readers of this page is interested to read the paper above mentioned "Ricardo, Sraffa, and Pasinetti, and beyond," please tell me so. I will be glad to send them the PDF of the paper, although it is still in a state of first draft.

Thank you for your detailed explanation.

I found by chance an example in which the author expressed that a producer is a "price-maker and quantity-taker." It appears in page 19 of Peter Wiles (1956) Price Cost and Output:

• Elasticity is not a timeless mathematical correlation in which tow symbols, p and q, devoid of content, are logically related. One is cause, the other is effect, and it matters very much which we mean. From the buyers's point of view -- and the concept began as a description of buyers -- price is always cause and purchase are effect. The same is true in an imperfect market from the producers's point of view. The producers set a price and he sees how much people buy: he is a price-maker and a quantity-taker. (Emphasis by P. Wiles)

Although this is much later than Hotelling (1929), it is much earlier than Kaldor (1985). Wiles' example may be a remarkable case between 1930's to 1970's.

N.B. Peter Wiles (P. J. D. Wiles) is a renowned researcher of the Soviet-type socialist economy.