The danger of tautological propositions is considerable in…
“The danger of tautological propositions is considerable in discussions of the concept of normal profits. Because supernormal profits seem to invite newcomers to an industry and sub-normal profits seem to drive away those who are in an industry, some writers are inclined to define normal profits as the earnings of the fixed resources in an industry which neither grows nor declines in size or number of firms. It should be clear that such a definition is useless: it muddles together attractiveness and actual afflux, desirbility of entry and ease of entry, zero profits and monopoly rents.”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Criticizes defining normal profits, arguing it confuses entry attractiveness with actual profit levels.
In simple terms: Defining normal profits is confusing and misleading.
Key Takeaway
Clarify profit concepts.
Themes
economics
theory
industry dynamics
Mood
analytical
critical
Type
theoretical
explanatory
When to use this quote
- academic papers
- policy analysis
- business strategy
Key Concepts
normal profit
entry barriers
market structure
Questions to Reflect On
- How to better define profit norms?
- What factors truly affect entry?
A Different Perspective
May oversimplify real markets.