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10. Monopoly and Competition

3. The Illusion of Monopoly Price

So far we have established that there is nothing “wrong” with a monopoly price, either when instituted by one firm or by a cartel; that, in fact, whatever price the free market (unhampered by violence or the threat of violence) establishes will be the “best” price. We have also shown the impossibility of separating “monopolizing” from efficiency considerations in cartel actions or of separating technology from profitability in general; and we have seen the great instability of the cartel form.

In this section we investigate a further problem: Granted that there is nothing “wrong” with monopoly prices, how tenable is the very concept of “monopoly price” on the free market? Can it be distinguished at all from “competitive price,” its supposed polar opposite? To answer this question, we must explore what the theory of monopoly price is all about.