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Chamberlin, Edward(1899–1967) an American economist who helped develop the theory of MONOPOLISTIC COMPETITION in his book The Theory of Monopolistic Competition. Prior to Chamberlin's work, economists classified markets into two groups:
- perfect competition, where firm's products are perfect substitutes;
- monopoly, where a firm's product has no substitutes.
Chamberlin argued that in real markets goods are often partial substitutes for other goods, so that even in markets with many sellers the individual firm's DEMAND CURVE might be downward sloping. He then proceeded to analyse the firm's price and output decisions under such conditions and derive the implications for market supply and price. See also ROBINSON.