Edward Chamberlin was born in La Conner, Washington, and
received his Ph.D. from Harvard University in 1927. He became
a full professor at Harvard in 1937 and stayed there until his
retirement in 1966. He published The Theory of Monopolistic
Competition in 1933.
Before Chamberlin’s book (which appeared more or less
simultaneously with Joan Robinson’s The Economics of
Imperfect Competition), the models of perfect competition and
monopoly had been fairly well worked out. Though economists
were aware of a middle ground between these two market
structures and some analysis of duopoly (two sellers) had been
presented, it was Chamberlin and Robinson who closely
examined this problem of imperfect markets.
Chamberlin’s main contribution was explaining the importance
of product differentiation for firms in market structures
between perfect competition and monopoly. Chamberlin saw
that though there may be a large number of firms in the market
(the competitive element), each firm created for itself a unique
product or advantage that gave it some control over price (the
monopoly element). Specifically, he identified items such as
copyrights, trademarks, brand names, and location as
monopoly elements behind a product. Though Alfred Marshall
regarded price as the only variable in question, Chamberlin saw
both price and the product itself as variables under control of
the firm in monopolistically competitive markets.