In response to Michael's comment that competition implies that prices would go down to marginal costs, this is only true if there are fixed cost functions (as opposed to fixed costs) and fixed demand. In other words, it is a static conclusion. Competition is perfectly compatible with profit in reality, as opposed to the static model. I am sure that Michael realizes this. From the cursory reading I did today, I think that Michael is right about most economists in the early AEA, including J. B. Clark. This is not surprising since they were members of a profession seeking both popular and government recognition during a period when the intellectual public was inclined to blame big business and big finance for problems in their life. On the other hand, the complaints are ironic; since until 1913 or so, world real GDP per capital was ending a century or so of unprecedented growth at an increasing rate, while world population was also growing at an increasing rate. Toward the end, the U.S. was a leader of this growth. This trend in world GDP continued after WWII. So the Americans intellectuals were getting richer while complaining louder. Big, expensive empty barrels make the most noise. And the professional economists seem to have readily accommodated by filling them with the fluff of economic half-truths. Michael, I don't see why an entrepreneur would want to avoid industries with relatively high startup costs (i.e., costs that must be incurred long before the product is sold). The choice to enter such industries is more uncertain, but it presumably would be associated with higher rewards to compensate. Perhaps more to the point, the concern expressed by the early 20th century American economists seems to have been with economies of scale (or natural monopoly), not fixed costs. The worry was that efficiency in cost would require a monopoly. There was also a great deal of concern about combinations or buyouts of and predation on previous competitors and the belief that such combinations inevitably cause the price to rise. The concept of "fixed costs" seems out of place here, at least as I recall from my microeconomics courses. Incidentally, today's reading took me to J. B. and J.M. Clark's "The Control of Trusts," where I encountered a different use of the term "dead weight." "If we can carry out all the changes and reforms proposed in the preceding pages...we shall not be burdened with the swollen and unnatural growth that comes from trying to absorb all possible competitors and that often results in burdening the merger with inefficient plants which the rest must carry as a dead weight." (first paragraph of Chapter Eight). http://socserv.mcmaster.ca/econ/ugcm/3ll3/clarkjb/ControlTrusts.pdf Pat Gunning