Mississippi
Valley and the Atlantic seaboard that it has an advantage over all
competitors in the business of transportation between those points.

We have now to turn our attention to other variations in competition
besides the variation in intensity. We need to distinguish the different
species of competition. That competition which is in daily operation in
most branches of industry we may call _actual_ competition. That
competition which would spring up in any industry in case an increase in
profits called it out, we may call _potential_ competition. The third
class is instanced in the letting to the highest bidder a franchise for
city water or gas-works, or street-car lines. Here competition acts at a
single time to fix the price for perhaps twenty years. We may call this,
for want of a better name, _franchise_ competition. It possesses the
evident advantage that it avoids both the waste of competition and the
fluctuation of prices. It has the disadvantage that, unless the owners
of the franchise are held strictly to their contract, quality is apt to
be sacrificed; also that if the purchase is for a term of years,
cheapening in processes may result in undue profits to the franchise
holders. The discussion of this matter, however, does not properly
belong to this chapter.

Arranging in their logical order the laws of competition which we have
found, we have the following diagram:

In any given industry the tendency toward monopoly increases:

(1.) As the waste due to competition increases.

The waste of competition increases in proportion to its intensity.

(1.) The intensity of competition increases as the number of
competing units decreases.

(2.) The intensity of competition increases with the amount of
capital required for each competing unit.

(2.) As the number of competing units decreases.

(3.) As the amount of capital required for each competing unit
increases.

(4.) As the number of available natural agents decreases.

The preceding diagram sets plainly before us the three great salient
causes from which have grown the long list of monopolies under which our
civilization labors. First, the supply of natural agents of which new
competitors in any industry may avail themselves has been largely
exhausted, or has been gathered up by existing monopolies to render
their position more secure; the world has not the natural resou