I. Introduction: the inadequacy of welfare economics in the field of imperfect and monopolistic competition; the nature of product differentiation, 533. — II. Product differentiation as an element in welfare policy, 535. — III. A contradiction in Hicks's analysis, 538. — IV. Kahn's dependence on indivisibilities, 541. — V. Two types of "imperfection" distinguished, 546. — VI. Conclusions, 551.