ing price to L1 a ton, but that by a trade agreement they
maintain L1 10s. as the minimum price, 10s. per ton represents the
economies of production which they divert from their customers into
their own possession by a limitation of the competition. Part of the
10s. may represent the actual saving of the labour which would have
been spent in competition as prices fell from L1 10s. to L1. Part may
represent a taking in higher profits of some of the economies of new
machinery or improved methods of production common to the competing
firms, and which would inevitably have led to a fall of price if the
competitive process had been allowed free play.

The prices thus fixed are monopoly prices--that is to say, they are
determined by the action of a number of competing capitals which at a
certain point agree to suspend their conflict and act as a single
capital; when the bidding is above a certain figure they are many,
when it is below that figure they are one. The condition in such a
trade is one of limited monopoly. The prices fixed by such trade
agreements will generally be different from those of a single firm
with the absolute monopoly of a market, whose prices are arranged to
yield the maximum net profit on the capital engaged. For since the
economies of competition and some of the economies of production would
be far greater for a single producing firm with a monopoly, the
schedule of supply prices measuring the expenses of producing the
different quantities of goods will be different, and this difference
will be reflected in a different scale of non-competitive market
prices from that which would issue from a trade agreement. Moreover, a
loose voluntary compact between trade rivals yields a monopoly of a
far feebler order than does the unity of a single capital. If a scale
of prices were fixed which would yield a considerably higher profit
than the market rate, the temptation to secure a larger share of trade
by secret underbidding through commissions, drawbacks, or otherwise,
or even by an open cutting of rates, is very powerful. Moreover, the
ability of a number of firms with conflicting interests to secure this
monopoly by quick and vigorous repression of the attempts of outside
capital to come in either for the purpose of sharing the higher
profits, or of being bought out, is far less than in the case of a
single monopolist firm. So the scale of prices fixed by a number of
competing firms will generally be nearer t