Austrian Monopoly Theory - A Critique

Abstract

There are two views of monopoly within what might be called the broad Austrian camp. According to the Mises-Kirzner view, monopoly price can exist on the free market, and a necessary part of its definition is a purposeful withholding of resources on the part of the monopolist. Rothbard, however, defines monopoly as an exclusive government grant of trading privileges, and, as such, finds it incompatible with market freedom.

In this paper I shall criticize the former view, (I) by considering alternative interpretations to monopolistic withholding, and (2) by considering several inconsistencies on the part of its proponents.