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and no individual can by himself have more than a negligible influence on price though all participants together determine price by the combined effect of their separate actions. |
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Monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. In some ways, monopoly comes closer to the ordinary concept of competition since it does involve personal rivalry. |
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Monopoly raises two classes of problems for a free society. First, the existence of monopoly means a limitation on voluntary exchange through a reduction in the alternatives available to individuals. Second, the existence of monopoly raises the issue of the "social responsibility," as it has come to be called, of the monopolist. The participant in a competitive market has no appreciable power to alter terms of exchange; he is hardly visible as a separate entity; hence it is hard to argue that he has any "social responsibility" except that which is shared by all citizens to obey the law of the land and to live according to his lights. The monopolist is visible and has power. It is easy to argue that he should discharge his power not solely to further his own interests but to further socially desirable ends. Yet the widespread application of such a doctrine would destroy a free society. |
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Of course, competition is an ideal type, like a Euclidean line or point. No one has ever seen a Euclidean linewhich has zero width and depthyet we all find it useful to regard many a Euclidean volumesuch as a surveyor's stringas a Euclidean line. Similarly, there is no such thing as "pure" competition. Every producer has some effect, however tiny, on the price of the product he produces. The important issue for understanding and for policy is whether this effect is significant or can properly be neglected, as the surveyor can neglect the thickness of what he calls a "line." The answer must, of course, depend on the problem. But as I have studied economic activities in the United States, I have become increasingly impressed with how wide is the range of problems and industries for which it is appropriate to treat the economy as if it were competitive. |
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The issues raised by monopoly are technical and cover a field |
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